Effect of Corporate Social Responsibility on the Financial Performance of Commercial Banks in Kenya

Abstract

Corporate social responsibility has been increasingly visible and central feature of businesses all over the world as consumers and governments become more concerned about aspects of sustainability and environmental impact that these businesses and corporations make as they pursue profits. CSR is mainly implemented by corporations with an aim of helping the society. The corporations also gain an advantage from carrying out a CSR in terms of gaining the public favorable view. This study thus sought to establish the effects of CSR activities on performance in financial terms of 39 commercial banks in Kenya with focus on education, health and environment CSR activities. A cross- sectional descriptive research design was used in this study. The study exclusively used secondary data for a period of five years from 2011 -2015 obtained from official financial statements of all the 39 banks. Data collected was analyzed using Statistical Package for Social Sciences (SPSS) Version 24 software through descriptive and inferential statistics and then presented via tables. The study found a significant positive relation between education CSR activities and financial performance, an insignificant negative relation between heath CSR activities and performance in financial terms, an insignificant but positive relation between environment CSR activities and the banks’ performance in financial terms. It was concluded that CSR activities influence the banks’ performance in financial terms. The study recommended that the management of banks to allocate more resources in different forms of CRS activities since CSR activities significantly influence the financial performance of Banks.