Effect Of Corporate Social Responsibility On Financial Performance Of Commercial Banks Listed At The Nairobi Stock Exchange

Abstract

This study sought to establish the relationship between Corporate Social Responsibility and financial performance of commercial banks listed at the Nairobi Stock Exchange. To achieve this, the stud investigated the effect of the amount of corporate investment made by Commercial Banks listed on NSE on Philanthropic, Ethical, Legal and Economic Responsibilities on their financial performance. The study adopted a longitudinal approach based on an explanatory research design. The target population for this study was 11 commercial banks registered under the Central Bank of Kenya (CBK, 2017) and listed under the NSE. (See Appendix I). Considering this small number, this study was a census. Secondary data collected between 2006 and 2016 was the primary focus of this study. Data analysis was then be conducted using STATA. All the Panel data properties of the data were considered during this analysis. Results indicated that investing in Philanthropic Activities would result to a positive and significant effect on financial performance as measured by ROI. However, investments in ethical, legal and Economic Activities would result to insignificant increases in financial performance of commercial banks listed at the NSE. The study therefore recommends stakeholders of commercial banks to invest more on Philanthropic Activities if they are to realize significant improvements in the performance of their finances.