Corporate social responsibility spending of commercial banks: determinants and consequence
DOI:
https://doi.org/10.22437/ppd.v8i5.10507Keywords:
CSR spending, Commercial banks, Performance, GhanaAbstract
The contribution of firms towards society in the form of corporate social responsibility has attracted significant concern for many stakeholders, especially among banks in Ghana. It is perceived that; banks especially do Corporate Social Responsibility just because they are the most profitable sector in Ghana. The study sort to examine the kind of relationship that exists between bank performance and CSR in Ghana. Also, to determine how bank size and profitability and it's listing status and foreign ownership influence CSR spending in Ghana. The study sampled 24 commercial banks over seven years from 2010 to 2016. The study analyzed data using statistical tools such as descriptive statistics, correlation analysis, and panel regression analysis. The study found out that engaging in CSR activities increases banks' profitability in Ghana, especially for ROE. Â Besides, the study concluded that bigger and larger banks are more profitable than small companies, so they are more involved in CSR activities. The study also investigated whether foreign ownership and the listing status of banks influence CSR spending. On this aspect, the study found out that banks' listing status influences CSR spending, but foreign ownership does not. The result implies that listed banks are more public and faces more social pressure hence they spend more on CSR to legitimize their operations.
Downloads
References
Abukari, A. J., & Abdul-Hamid, I. K. (2018). Corporate social responsibility reporting in the telecommunications sector in Ghana. International Journal of Corporate Social Responsibility, 3(2), 2.1-9
Aboagyeâ€Otchere, F. K., Simpson, S. N. Y., & Kusi, J. A. (2020). The influence of environmental performance on environmental disclosures: An empirical study in Ghana. Business Strategy & Development, 3(1), 98-111.
Adeyanju, O. D. (2012). An assessment of the impact of corporate social responsibility on Nigerian society: The examples of banking and communication industries. Universal Journal of Marketing and Business Research, 1(1), 17-43.
Ahmed, S., & Akter, M. (2015). Determinants of corporate social responsibility of banking industry listed in the Dhaka stock exchange limited. DU Journal of Marketing, 16, 1-16.
Al Mamun, M., Sohog, K., & Akhter, A. (2013). A dynamic panel analysis of the financial determinants of CSR in Bangladeshi banking industry. Asian Economic and Financial Review, 3(5), 560.
Ansong, A. (2017). Corporate social responsibility and firm performance of Ghanaian SMEs: The role of stakeholder engagement. Cogent Business & Management, 4(1), 1333704.
Awunyo-Vitor, D., & Badu, J. (2012). Capital structure and performance of listed banks in Ghana. Global Journal of Human-Social Science Research, 12(5).
Bhagawan, PM, & Mukhopadhyay, J. P. (2018). Does Mandatory Expenditure on CSR Affect Firm Value? Empirical Evidence from Indian Firms. EFMA 2018 Meeting
Boateng, H., & Abdul-Hamid, I. K. (2017). An evaluation of corporate social responsibility communication on the websites of telecommunication companies operating in Ghana. Journal of Information, Communication and Ethics in Society, 15(1), 17-31.
Bolton, B. J., Corporate Social Responsibility and Bank Performance (June 11, 2013). http://dx.doi.org/10.2139/ssrn.2277912.
Bowerman, S., & Sharma, U. (2016). The effect of corporate social responsibility disclosures on share prices in Japan and the UK. Corporate Ownership and Control, 13(2), 202-216
Chauhan, S. (2014). A Relational Study of Firm's Characteristics and CSR Expenditure. Procedia Economics and Finance, 11, 23-32.
Cheng, B., Ioannou, I., & Serafeim, G. (2014). Corporate social responsibility and access to finance. Strategic management journal, 35(1), 1-23.
Chih, H. L., Chih, H. H., & Chen, T. Y. (2010). On the determinants of corporate social responsibility: International evidence on the financial industry. Journal of Business Ethics, 93(1), 115-135.
Coffie, W., Aboagye-Otchere, F., & Musah, A. (2018). Corporate social responsibility disclosures (CSRD), corporate governance and the degree of multinational activities: Evidence from a developing economy. Journal of Accounting in Emerging Economies, 8(1), 106-123
Cornett, M. M., Erhemjamts, O., & Tehranian, H. (2014). Corporate social responsibility and its impact on financial performance: Investigation of US commercial banks. Unpublished manuscript.
Cornett, M. M., Erhemjamts, O., & Tehranian, H. (2016). Greed or good deeds: An examination of the relation between corporate social responsibility and the financial performance of US commercial banks around the financial crisis. Journal of Banking & Finance, 70, 137-159.
Donaldson, T., & Preston, L. E. (1995). The stakeholder theory of the corporation: Concepts, evidence, and implications. Academy of Management Review, 20(1), 65-91.
Ebo Hinson, R., & Kodua, P. (2012). Examining the marketing-corporate social responsibility nexus. International Journal of Law and Management, 54(5), 332-344.
El Ghoul, S., Guedhami, O., Kwok, C. C., & Mishra, D. R. (2011). Does corporate social responsibility affect the cost of capital?. Journal of Banking & Finance, 35(9), 2388-2406.
Fifka, M. S. (2013). Corporate responsibility reporting and its determinants in comparative perspective – a review of the empirical literature and a metaâ€analysis. Business strategy and the environment, 22(1), 1-35.
Fijałkowska, J., Zyznarska-Dworczak, B., & Garsztka, P. (2017). The relation between the CSR and the accounting information system data in Central and Eastern European (CEE) countries– the evidence of the Polish financial institutions. Accounting and Management Information Systems, 16(4), 490-521.
Freeman, R. E., & Reed, D. L. (1983). Stockholders and stakeholders: A new perspective on corporate governance. California management review, 25(3), 88-106.
Garcia-Castro, R., Ariño, M. A., & Canela, M. A. (2010). Does social performance really lead to financial performance? Accounting for endogeneity. Journal of Business Ethics, 92(1), 107-126.
Griffin, J. J., & Mahon, J. F. (1997). The corporate social performance and corporate financial performance debate: Twenty-five years of incomparable research. Business & Society, 36(1), 5-31.
Hassn, N. T. (2014). Corporate governance, degree of multi-nationality, and corporate social responsibility disclosure: evidence from the UK. Journal of Empirical Research in Accounting & Auditing, 1(1), 1-18.
Hinson, R., Boateng, R., & Madichie, N. (2010). Corporate social responsibility activity reportage on bank websites in Ghana. International Journal of Bank Marketing, 28(7), 498-518.
Islam, Z., Ahmed, S., & Hasan, I. (2013). Corporate social responsibility and financial performance linkage: Evidence from the banking sector of Bangladesh. Bank Prikrama, 48(2), 109-130
Lee, S., Seo, K., & Sharma, A. (2013). Corporate social responsibility and firm performance in the airline industry: The moderating role of oil prices. Tourism management, 38, 20-30.
Mahmoud, M. A., Blankson, C., & Hinson, R. E. (2017). Market orientation and corporate social responsibility: towards an integrated conceptual framework. International Journal of Corporate Social Responsibility, 2(1), 9.
Marcia, M. C., Otgontsetseg, E., & Hassan, T. (2013). Corporate Social Responsibility and its Impact on Financial Performance: Investigation of US Commercial Banks. Unpublished research paper, Department of Finance, Bentley University, Waltham, US.
Marfo, E. O., Chen, L., Xuhua, H., & Benjamin, G. (2016). The antecedents of corporate social responsibility for extractive industries in the governance systems in Africa. International Journal of Engineering Research in Africa, 24.
Margolis, J. D., & Walsh, J. P. (2003). Misery loves companies: Rethinking social initiatives by business. Administrative science quarterly, 48(2), 268-305.
Mbithi, A. M. (2015). Effects of corporate social responsibility on organisations' profitability of the banks listed on Nairobi stock exchange [Doctoral dissertation]. South Eastern Kenya University
Musah, A., Abdulai, M., & Baffour, H. (2019). The Effect of Mergers and Acquisitions on Bank Performance in Ghana. Asian Journal of Economics and Empirical Research, 7(1), 36-45.
Musah, A. (2018). The Impact of Capital Structure on Profitability of Commercial Banks in Ghana. Asian Journal of Economic Modelling, 6(1), 21-36.
Nwaneri, E. C. (2015). The impact of corporate social responsibility (CSR) on organization profitability. International Journal of Business and Management, 10(9), 60.
Ofori, D. F., & Hinson, R. E. (2007). Corporate social responsibility (CSR) perspectives of leading firms in Ghana. Corporate Governance, 7(2), 178-193.
Ofori, D. F., S-Darko, M. D., & Nyuur, R. B. (2014). Corporate social responsibility and financial performance: Fact or fiction? A look at Ghanaian banks. Acta Commercii, 14(1), 1-11.
Omoro, N., Kinyua, H., & Okiro, K. (2013). Investment in Corporate Social Responsibility and Sustained Growth in Commercial Banks in Kenya. Journal of Emerging Issues in Economics, Finance and Banking. An Online International Monthly Journal, 3(2), 1057-1064.
Oppong, S. (2014). Corporate Social Responsibility and Corporate Performance: A Study of the Top 100 Performing Firms in Ghana. Journal of Contemporary Research in Management, 9(2), 23-33
Orlitzky, M., Schmidt, F. L., & Rynes, S. L. (2003). Corporate social and financial performance: A meta-analysis. Organization studies, 24(3), 403-441.
Rahaman, A.S. (2000). Senior management perceptions of social and environmental reporting in Ghana. Social and Environmental Accountability Journal, 20(1), 7-10.
Rahaman, A. S., Lawrence, S., & Roper, J. (2004). Social and environmental reporting at the VRA: institutionalised legitimacy or legitimation crisis?. Critical Perspectives on Accounting, 15(1), 35-56.
Sabri, T. B. H., & Sweis, K. M. H. (2016). Effect of Corporate Social Responsibility on Profitability of Banks Working in Palestine (Case Study 2013-2014). International Journal of Business Administration, 7(6), 107.
Samina, Q. S. (2012). Practice of corporate social responsibility in Islamic banks of Bangladesh. World, 2(6), 1-13.
Shen, C. H., & Chang, Y. (2009). Ambition versus conscience, does corporate social responsibility pay off? The application of matching methods. Journal of Business Ethics, 88(1), 133-153.
Soana, M. G. (2011). Corporate social responsibility and financial performance: evidence from the financial sector. Corporate Ownership & Control, 8(2), 27-36.
Sweeney, L. (2009). A study of current practice of corporate social responsibility (CSR) and an examination of the relationship between CSR and financial performance using structural equation modelling (SEM). [Doctoral Dissertation], Dublin Institute of Technology, Dublin
Tafti, S. F., Hosseini, S. F., & Emami, S. A. (2012). Assessment the corporate social responsibility according to Islamic values (case study: Sarmayeh Bank). Procedia-Social and Behavioral Sciences, 58, 1139-1148.
Taskin, D. (2015). The Relationship between CSR and Banks' Financial Performance: Evidence from Turkey. Journal of YaÅŸar University, 10(39), 21-30.
Weshah, S. R., Dahiyat, A. A., Awwad, M. R. A., & Hajjat, E. S. (2012). The impact of adopting corporate social responsibility on corporate financial performance: Evidence from Jordanian banks. Interdisciplinary Journal of Contemporary Research in Business, 4(5), 34-44.
Wu, M. W., & Shen, C. H. (2013). Corporate social responsibility in the banking industry: Motives and financial performance. Journal of Banking & Finance, 37(9), 3529-3547.
Yeung, S. (2011). The role of banks in corporate social responsibility. Journal of Applied Economics and Business Research, 1(2), 103-115.
Welbeck, E. E., Owusu, G. M. Y., Bekoe, R. A., & Kusi, J. A. (2017). Determinants of environmental disclosures of listed firms in Ghana. International Journal of Corporate Social Responsibility, 2(1), 11.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2020 Alhassan Musah
This work is licensed under a Creative Commons Attribution 4.0 International License.
