The effect of corporate social responsibility on the financial performance of banks: a case study of Ecobank Ghana Limited
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Date
2017
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KNUST
Abstract
ABSTRACT
The protracted debate on Corporate Social Responsibility has left in its wake a number of divergent views. Besides an organization's generic orientation of being profitable, it is obliged to be socially responsible to all its stakeholders. In spite of CSR being highly publicized, there is little consensus about its essence to an organization and if an organization stands to benefit from being a socially responsible organization. Similarly, the literature on the link between CSR and Financial Performance is equally fraught with conflicting results which makes it all the more difficult to have some sort of consistency on the subject. It is against this background that the study was undertaken to further delve into the subject and ascertain whether a relationship exists between the two by focusing on the banking industry and for that matter Ecobank Ghana Limited. The study used a blend of qualitative and quantitative methods and made use of extensive data over a period of ten years to explore the relationship between corporate social responsibility and financial performance. The financial performance of the bank was analyzed by considering three different measures of financial performance namely profit after tax, return on equity and return on assets in order to thoroughly assess its financial performance. The dataset was analyzed using SPSS 20.0 to assess the effect as well as test the hypotheses of the study to determine the existence of a relationship and the extent of the relationship between the dependent variable (financial performance) and the independent variable (corporate social responsibility expenditure) with size and financial leverage as control variables. The results of the analysis indicate that CSR has a positive effect on financial performance with regards to profit after tax, supporting the view that social responsibility can be associated with a series of benefits like enhanced organizational image, customer loyalty and ultimately financial performance. The study concludes on the basis that there is a significant relationship between CSR and profit after tax as a measure of financial performance.
Description
A thesis presented to the department of finance, school of business, Kwame Nkrumah University of science and technology in partial fulfilment of the requirements for the Award of Master of Business Administration (MBA) Degree in Finance