Social responsibility and performance of commercial banks in Kenya

Abstract

Society is increasingly viewing businessmen as trustees and as such, they must be responsible for balancing a variety of demands and rights of all stakeholders, rather than enhancing the wealth of a few claimants. One thing is for sure-the pressure on business to playa role in social issues will continue to grow. Embracing the concept is not without its challenges, but modern business managers are too familiar with the downside of not embracing it. The study sought to find out the relationship that exists between social responsibility and profitability of commercial banks in Kenya. The researcher carried out a census survey of all the commercial banks and top managers at the various banks were required to complete a questionnaire consisting of five sections. Each section of the questionnaire was aimed at answering each of the four objectives of the study, while the last section aimed at gathering demographic statistics. The results show that the impact of social expenditure on profitability and financial position of banks is key in determining the amount to spend on these activities. So much so that employees are at times called upon to make direct contributions towards social activities. Although there is awareness and concern for social responsibility, there is lack of courage by many banks to implement necessary action, due to what they perceive as financial constraints. Thus, the banks that spend more on social responsibility are actually those whose profitability is higher as compared to those who feel their profits are lower and thus make a lesser contribution or none at all for some banks, towards social issues in the community.