Does Corporate Social Responsibility Affect Financial Performance Of Quoted Banks? Evidence From Nigeria

Abstract

ABSTRACT This study provides information on the effect of corporate social responsibility (CSR) on the corporate financial performnce (CFP) of quoted banks in Nigeria. Using corporate social responsibility expenditure as proxy for CSR and the trio of return on assets (ROA), return on equity (ROE), and bank earnings per share (EPS) as proxy for CFP, regression analysis was conducted. ROA, ROE and EPS data were gathered from the financial statements of the banks for the period 2012 – 2016. In particular, our analysis and findings suggest that CSR expenditure had no significant effect on all the three proxies of CFP of quoted banks in Nigeria. This supports the arguments in the literature that financial performance alone does not justify expenditure on CSR activities by the quoted Nigerian banks. We conclude that there is the need for banks to weigh other factors to see if the case for CSR activities exists. If they do not, the banks should stop engaging in these activities where the purpose was to be for increasing the profitability of the banks.

Keywords

• Return on assets (ROA), return on equity (ROE), earnings per share (EPS), kinder, lydenberg & domini (KLD)