Abstract:
The interest on Corporate Social Responsibility (CSR) has risen to great heights
within the banking sector within the last decade. Commercial banks have thus
increasingly embraced CSR disclosure practice on social, economic and
environmental operations. The main focus of this study was to examine the effect of
CSR dimensions relating to education and environmental conservation performance
of commercial banks listed in the Nairobi Stock Exchange. The paper employed
desktop research by reviewing and analyzing audited published financial reports at
NSE. The study population was 11 commercial banks listed at NSE as per December
2017. CSR investments were measured using monetary expenditure on social
activities. Financial performance was measured using the net profit. Data was
analyzed using a multiple regression model. A non-probabilistic sampling design
was used as only those banks which engaged in CSR for the period from 2012 to 2017
were listed in the study. The study established that investments in CSR activities are
positively related to the financial performance of commercial banks; banks which
consistently invested in CSR had higher financial performance; and employed better
customer loyalty. It was observed that CSR programs build bank's reputation; hence
increased market share which consequently leads to high financial performance. The
study recommends that commercial banks and other institutions should consistently
invest in activities that considers the interest of all stakeholders, and that businesses
should invest highly in education programs for the disadvantaged groups,
environment, and social empowerment through gender mainstreaming as that results
in high financial performance.
