Effect of corporate social responsibility on financial performance in the banking sector evidence from the Nairobi Securities Exchange
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Date
2014-08Author
Nyamute, Winnie
Batta, Nidhi
Language
enMetadata
Show full item recordAbstract
Corporate Social Responsibility (CSR) is increasingly being embraced by organizations
worldwide. This study aims to investigate the relationship between CSR and financial
performance for the banks listed on the Nairobi Securities Exchange (NSE). The study
analyzed ten of the eleven banks listed on the NSE for the period 2008 to 2012 using data
obtained from audited annual reports and other publications by the banks including
information from their websites. The analysis was done using multiple regression analysis
and the correlation coefficient (r) was calculated together with the coefficient of
determination (r2) to further determine the relationship between the variables. The research
found that there was an insignificant positive relationship between CSR and financial
performance in the Kenyan banking industry with CSR having a very minimal effect on
financial performance. The model shows that, for every one unit increase in CSR, the firm’s
financial performance increases by 0.00002 units. The study further concluded that in the
Kenyan banking industry, CSR activities are not undertaken for the purpose of improving the
banks financial performance but are undertaken for other reasons such as building brand
image and building customer loyalty.
Publisher
University of Nairobi