Corporate Social Responsibility and Financial Performance of Banks: Evidence from Listed Deposit Money Banks in Nigeria.

Abstract

The study examined the influence of corporate social responsibility (CSR) on the financial performance of listed deposit money banks in Nigeria from 2014 to 2023. The study was anchored on Stakeholders’ Theory, which highlights the importance of meeting the needs of all stakeholders. The research employed an ex-post facto design to evaluate pre-existing data. Secondary data were sourced from the annual reports and accounts of six (6) selected banks Zenith, GTB, UBA, Eco, Fidelity, and Union Bank listed on the Nigerian Exchange Group (NGX). Panel data analysis was utilized to evaluate the impact of various CSR expenditures on financial performance. The findings indicted that educational expenditure positively influenced the financial performance of the banks, suggesting that investments in educational CSR initiatives yield beneficial returns. Conversely, charitable expenditure did not show a statistically significant impact on financial outcomes, implying limited direct financial benefits. Health and medical expenditures were associated with a significant negative effect on financial performance, indicating possible inefficiencies in such investments. Based on these outcomes, it is recommended that banks continue to invest in educational CSR programs, as these initiatives improve financial performance and corporate reputation. Charitable CSR activities should be reviewed and potentially restructured to align with strategic goals. Additionally, banks should critically evaluate health and medical expenditure to optimize their impact on profitability and ensure more effective resource allocation.