Impact of corporate social responsibility on financial performance of Nepalese commercial banks
Date
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Department of Management
Abstract
The role of businesses has evolved from a traditional point of view of businesses’ main
focus of profit maximization to a more contemporary view of social responsibility and
responsiveness over the last few decades where the importance of CSR is gradually
increasing and is becoming ever more significant. This study aims to examine the
impact of CSR on financial performance of Nepalese commercial banks. CSR expenses
has been used as a proxy for the independent variable CSR while ROA, ROE and EPS
have been used as proxies for the dependent variable financial performance. The
sample includes 16 out of 27 commercial banks of Nepal with a study period of five
years from the fiscal year 2016/17 till 2020/21 making observations of 80 cases. The
study is based on secondary data collected from the annual reports of the sample banks
as NRB directives from 2016/17 mandated BFIs to allot a percent from net profit for
CSR funds for the following year and disclose CSR initiatives in the reports. This study
employs a causal comparative research design and uses mean, standard deviation,
coefficient of variance, correlation and regression to draw conclusions. The research
findings conclude that there is a negative and significant relationship and impact of
CSR on ROA, while there are no significant relationships between CSR and the
dependent variables ROE and EPS.
Key Words: Corporate social responsibility, financial performance, return on assets,
return on equity, earnings per share.