From traditional roots to digital bytes: Can digitalizing ESG improves Ghanaian rural banks’ brand equity through stakeholder engagement, and customer loyalty?

Figures & data

Figure 1. Conceptual framework.

Table 1. Variable measurement

Variables	Acronym	Measurement	Items	Source
Digitalization of ESG	DESG	The study adopted a five-point Likert scale where (1= strongly disagree to 5= strongly agree) to measure customers’ and bank officials’ perceptions of DESG	9	Tripopsakul & Puriwat, (2022)
Stakeholder Engagement	SE	The study also collected information on stakeholder engagement of rural banks from the same respondents on a five-point Likert scale where (1=never, 5= always).	5	Mitchell et al. (1997); ATing et al.(2021)
Customer Loyalty	CL	The study measured customer loyalty based on a five-point Likert scale (1= not at all, 5 = extremely).	5	Mitchell et al. (1997); Ting et al. (2021)
Brand Equity	BE	To calculate brand equity, the study used the “Brand Equity Questionnaire,” which Keller created in 1993 and Tran, Nguyen, and Tran modified in P. K. T. Tran et al. (2021). This was also based on a five-point Likert scale, where (1=strongly disagree, 5= strongly agree).	8	Keller (1993); P. K. T. Tran et al. (2021)
Financial Performance	FP	The financial performance of firms was measured using a scale adapted from Dandago and Gololo’s (2020) studies on financial performance on a five-point Likert scale (1=very poor, 5 = very good).	7	Dandago and Gololo’s (2020)

Table 2. Biographical information of respondents

	Subscale	Customers	Bank Officials	Total
Gender	Male	231	86	317(44%)
	Female	306	101	407(56%)
Age	18–27	118	32	150(21%)
	28–37	129	60	189(26%)
	38–47	150	43	193(27%)
	Above 47	140	52	192(27%)
Educational Background	Junior -Senior High	242	0	242(33%)
	Diploma	183	84	267(37%)
	First degree and above	113	103	216(30%)
Transactions per month	Very Often	172	-	172(32%)
	Always	150	-	150(28%)
	Not Often	118	-	118(22%)
	Rarely	97	-	97(18%)
Occupation	Public worker	107	-	107(20%)
	Entrepreneur	118	-	118(22%)
	NGOs	193	-	193(36%)
	Others	118	-	118(22%)
Managerial position	ESG Managers	-	67	67(36%)
	Senior Management	-	64	64(34%)
	Customer Relation Manager	-	56	56(30%)
Working Experience	1–5 years	-	37	37(20%)
	6–10 years	-	79	79(42%)
	Above 10 years	-	71	71(38%)
Location of Bank	Northern sector	118	36	154(21%)
	Southern Sector	172	64	235(33%)
	Eastern Sector	145	47	192(26%)
	Western Sector	102	41	143(20%)

Notes: “-” means that the information is not available.

Figure 2. Difference in DESG among the four main sectors.

Figure 3. Pre-estimations of the model.

Table 3. Descriptive statistics of Empirical data

Variables	N	Mean	Max	Min	SD	Excess Kurtosis	Skewness
Digitalized ESG (DESG)	537	4.21	5	1	0.93	1.807	−0.419
Stakeholder Engagement (SE)	537	3.53	5	1	0.82	1.320	−0.428
Customer Loyalty (CL)	537	3.95	5	1	0.90	1.027	−0.103
Brand Equity (BE)	537	3.82	5	1	0.68	1.833	−0.482
Financial Performance (FP)	187	3.58	5	1	0.49	2.835	−0.439

Table 4. Correlation matrix of the constructs

Constructs	FP	DESG	SE	CL	BE	FP	Tolerance	VIF
FP	1.000						0.727	2.44
DESG	0.038*	1.000					1.305	3.19
SE	0.143**	0.312**	1.000				0.932	2.41
CL	0.309***	0.405***	0.025*	1.000			1.539	3.08
BE	0.012**	0.029*	0.180**	0.102*	1.000		1.472	3.56
FP	0.220**	0.201*	0.016**	0.029*	0.062	1.000	1.276	4.76

*, **, *** denote p < 0.05, p < 0.1, p < 0.1 respectively

Table 5. Results of validity and reliability of items constructs

Constructs	Code	FL ≥ 0.6	CA ≥0.7	CR≥0.7	Rho_ACP≥0.5	AVE≥0.5
Digitalized ESG (DESG)	DESG1	0.791	0.877	0.903	0.825	0.699
	DESG2	0.802
	DESG3	0.815
	DESG4	0.792
	DESG5	0.702
	DESG6	0.841
	DESG7	0.788
	DESG8	0.818
	DESG9	0.793
Stakeholder	SE1	0.783	0.814	0.869	0.839	0.680
Engagement (SE)	SE2	0.814
	SE3	0.792
	SE4	0.801
	SE5	0.832
Customer Loyalty	CL1	0.824	0.825	0.873	0.802	0.715
(CL)	CL2	0.792
	CL3	0.823
	CL4	0.792
	CL5	0.811
Brand Equity (BE)	BE1	0.791	0.836	0.839	0.710	0.576
	BE2	0.809
	BE3	0.818
	BE4	0.792
	BE5	0.803
	BE6	0.796
	BE7	0.803
	BE8	0.759
Financial	FP1	0.823	0.863	0.868	0.735	0.640
Performance (FP)	FP2	0.818
	FP3	0.802
	FP4	0.791
	FP5	0.808
	FP6	0.790
	FP7	0.769

Table 6. Discriminant validity

Constructs	DESG	SE	CL	BE	FP
Discriminant validity (Fornell-Larcker Criterial)
DESG	0.681
SE	0.402	0.692
CL	0.541	0.501	0.651
BE	0. 287	0.316	0.358	0.618
FP	0.667	0.218	0.152	0.351	0.639
Heterotrait-Monotrait Ratio (HTMT) Criterial
DESG	0.521
SE	0.201	0.783
CL	0.362	0.438	0.312
BE	0.406	0.372	0.129	0.625
FP	0.277	0.286	0.248	0.391	0.407

Figure 4. Structural model significance.

Table 7. Model goodness and fitness

Models	R^2	R^2 _adj	Q^2 > 0	F^2 >0.35	Goodness of Fit	Decision
Model 1: Control variables
Firm Size	0.286	0.304	0.259	0.381	0.339
Firm Age
Location
Model 2: Direct Effect
DESG➔ BE	0.483	0.529	0.387	0.368	0.372	Supported
DESG➔ FP	0.240	0.351	0.473	0.439		Supported
BE➔ FP	0.582	0.596	0.279	0.392		Supported
Model 3: Mediation (Indirect Effect)
SE➔ DESG➔ BE	0.482	0.539	0.429	0.358	0.380	Supported
CL➔ DESG➔ BE	0.282	0.384	0.368	0.419		Supported
SE&CL➔ DESG➔ BE	0.379	0.439	0.279	0.391		Supported
DESG & BE ➔ FP	0.439	0.583	0.581	0.460		Supported

Model Fitness:

Saturated Model: SRMR= 0.003, d_ULS=2.015,d_G= 1.239, Chi-Square= 3529.12, NFI= 0.928

Estimated Model: SRMR= 0.04, d_ULS=4.201, d_G= 2.018, Chi-Square= 2135.62, NFI=0.935

Table 8. Hypothesis testing

Relationship	Β	T-Statistics	Lower Confidence Interval	Upper Confidence Interval	Decision
Model 1-Contol Variables
Firm Size	0.691	9.278*	0.273	0.582
Firm Age	0.348	8.492*	0.479	0.783
Location	0.680	7.469*	0.138	0.482
Model 2- Direct Effect
DESG➔ BE	0.513	11.812*	0.692	1.068	Supported
DESG➔ FP	0.386	8.393**	0.438	0.873	Supported
BE➔ FP	0.537	13.478*	0.473	1.278	Supported
DESG➔ BE	0.603	12.730*	0.483	1.029	Supported
Model 3-Mediation (Indirect Effect)
SE➔ DESG➔ BE	0.248	9.749*	0.539	0.632	Supported
CL➔ DESG➔ BE	0.458	10.483**	0.386	0.473	Supported
SE&CL➔ DESG➔ BE	0.683	12.683*	0.582	0.639	Supported
DESG & BE ➔ FP	0.472	8.493*	0.472	0.494	Supported

*,**, p<.05, 0.1, respectively

Table 9. Sub-group analysis of hypothesis

Relationship	Northern Sector (n=118)	Eastern Sector (n=145)	Western Sector (n=102)	Southern Sector (n=172)	Decision
Model 1-Control Variables
	β	β	β	β
Firm Size	0.208*	0.078*	0.283*	0.229*
Firm Age	0.102	0.012**	0.182*	0.208*
Location	0.404*	0.419*	0.329*	0.301*
Model 2- Direct Effect
DESG➔ BE	0.238*	0.230*	0.104*	0.139*	Supported
DESG➔ FP	0.402**	0.416	0.185*	0.202*	Supported
BE➔ FP	0.182*	0.382*	0.105*	0.184**	Supported
DESG➔ BE	0.491*	0.148**	0.149*	0.131**	Supported
Model 3-Mediation (Indirect Effect)
SE➔ DESG➔ BE	0.302	0.282**	0.201*	0.215*	Supported
CL➔ DESG➔ BE	0.219**	0.502*	0.212**	0.209*	Supported
SE&CL➔ DESG➔ BE	0.249*	0.683**	0.301*	0.012*	Supported
DESG & BE ➔ FP	0.200**	0.493*	0.229*	0.019*	Supported
R2 _adj	0.328	0.420	0.142	0.385
Q2 > 0	0.147	0.201	0.150	0.149
F2 >0.35	0.392	0.420	0.116	0.390
Goodness of Fit	0.352	0.384	0.204	0.367

*, **, *** denote p < 0.05, p < 0.1, p < 0.1 respective

Table

Codes	Items	Likert Scale
	(1= strongly disagree, 2=disagree, 3=not sure, 4=agree, 5= strongly agree)
Digitalization of Environmental Social and Governance (DESG)		1	2	3	4	5
DESG1	Our bank uses technology to protect the environment and reduce waste
DESG2	Our bank uses technology to save resources without harming the environment.
DESG3	Our bank uses eco-friendly materials to conduct business
DESG4	Our bank is committed to recycling and proper disposal of waste
DESG5	Our bank values local culture and traditions
DESG6	Our bank contributes to the long-term well-being and quality of life in our community
DESG7	Our bank supports social and economic growth and provides help to those in need
DESG8	Our bank is committed to upholding ethical ideals and avoiding corruption in our operations.
DESG9	Our bank values and prioritizes the well-being of our partners, shareholders, and stakeholders.
(1= never, 2=rarely, 3=sometimes, 4=often, 5=always)
Stakeholder Engagement (SE)		1	2	3	4	5
SE1	My bank communicates its ESG practices effectively and transparently
SE2	I am satisfied with the level of communication and transparency from my bank regarding ESG practices
SE3	Stakeholders have a meaningful influence on the decision-making process related to ESG practices in my bank
SE4	Stakeholders are satisfied with the level of engagement and consultation on ESG practices by my bank
SE5	My bank regularly reports on the progress and impact of its ESG practices to stakeholders
(1= not at all, 2=slightly, 3=moderately, 4=highly, 5=extremely)
Customer Loyalty (CL)		1	2	3	4	5
CL1	How satisfied are you with the digital ESG practices of your rural bank?
CL2	How accessible is information about the digital ESG practices of your rural bank?
CL3	Does the digitalization of ESG practices increase your trust in your rural bank?
CL4	How does the integration of digital tools into your rural bank’s ESG practices affect your engagement with ESG issues?
CL5	Does the digitalization of ESG practices improve your loyalty to your rural bank?
(1= strongly disagree, 2=disagree, 3=not sure, 4=agree, 5= strongly agree)
Brand Equity (BE)		1	2	3	4	5
BE1	I am familiar with the name of our rural bank
BE2	I have positive feelings towards our rural bank
BE3	I would recommend our rural bank to others
BE4	Our rural bank is unique compared to other banks
BE5	Our rural bank performs well in terms of ESG practices compared to other banks
BE6	The use of digital tools in our ESG practices positively affects the overall perception of our rural bank
BE7	The use of digital tools in our ESG practices has improved our rural bank’s reputation
BE8	The digitalization of ESG practices in our rural bank has positively influenced its competitiveness in the market
(1= very poor, 2=poor, 3=average, 4=good, 5=very good)
Financial Performance (FP)		1	2	3	4	5
FP1	What was the net profit of your rural bank for the previous year?
FP2	How would you rate your rural bank’s return on assets (ROA) for the previous year?
FP3	How would you rate your rural bank’s return on equity (ROE) for the previous year?
FP4	What was the loan-to-deposit ratio for your rural bank for the previous year
FP5	How would you rate your rural bank’s asset quality for the previous year?
FP6	What was the capital adequacy ratio for your rural bank for the previous year?
FP7	How would you rate your rural bank’s efficiency ratio for the previous year?

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