Original Author (Copyright Owner): ESU, Etim


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The study entitled “Corporate Social Responsibility and Performance in Nigerian Deposit Money Bank” was designed to examine the impact of Corporate Social Responsibility (CSR) on the performance of Nigerian Deposit Money Bank. Three research hypotheses were formulated in a null form. The aim was to examine to what extent CSR proxies vis-a-vis Community Corporate Social Responsibility (CCSR), Charity Contribution (CC) & Human Resources Development (HRM) have impacted on the performance variable Return On Equity (ROE). The population of the study comprises all the banks that survived the recapitalization exercise. A sample of seven banks was selected using judgmental approach. This approach seemed appropriate in selecting the sample size since set of criteria were laid down and is only those that met the conditions were selected. The study adopted descriptive research design as a research method. A set of model was formulated to address the stated problem. Multiple regression models were used to test the hypotheses at 5% significance level. All the hypotheses were rejected as all the proxies(independent variables) were found to have statistical significant impact on the performance variables at 5% significance level. The study recommends that a dialogue should be made with the business world and other stakeholders in determining common standards, reporting mechanisms and the extent to which they should be responsible.


Title page – – – – – – – – – i
Declaration – – – – – – – – – ii
Certification – – – – – – – – – iii
Dedication – – – – – – – – – iv
Acknowledgment – – – – – – – – v
Abstract – – – – – – – – – vi
Table of Content – – – – – – – – vii

1.1 Background to the study – – – – – – 1
1.2 Statement of the Problem – – – – – – 3
1.3 Objective of the Study – – – – – – 4
1.4 Research Hypotheses – – – – – – 5
1.5 Significance of the Study – – – – – – 5
1.6 Scope of the Study – – – – – – – 6

2.1 Introduction – – – – – – – – 7
2.2 Concept of Corporate Social Responsibility – – – 7
2.3 Ethical Issues on Corporate Social Responsibility – – 13

2.4 Argument Against Corporate Social Responsibility – – 21
2.5 Strategic Role of Corporate Social Responsibility – – 26
2.6 Corporate Social Responsibility Disclosure – – – 28
2.7 Accounting for Corporate Social Responsibility – – 31
2.8 Difficulties in Reporting Social Responsibility Accounting 49
2.9 Impact of Corporate Social Responsibility on Firm Value 50
2.10 Impact of Corporate Social Responsibility on Customer
Satisfaction – – – – – – – – 51
2.11 The Role of Government in Corporate Social
Responsibility Disclosure. – – – – – 53
2.12 Theoretical Framework – – – – – – 57

3.1 Introduction – – – – – – – – 70
3.2 Research Method Used – – – – – – 71
3.3 Population and Sample Technique – – – – 72
3.4 Method of Data Collection – – – – – 74
3.5 Model Specification – – – – – – 74
3.6 Technique of Data Analysis – – – – – 75
3.7 Justification of the Research Design Adopted – – 76
3.8 Summary – – – – – – – – 77

4.1 Introduction – – – – – – – – 78
4.2 Basic Sample Statistics – – – – – – 80
4.3 Corporate Social Responsibility and Nigerian Banks’
Performance – – – – – – – – 82
4.4 Discussion of Major findings – – – – – 84


5.1 Summary – – – – – – – – 86
5.2 Conclusions – – – – – – – – 87
5.3 Limitation of the Study – – – – – – 88
5.4 Recommendations – – – – – – – 89
Bibliography – – – – – – – 92
Appendices – – – – – – – – 101


Background to the Study

Corporate Social Responsibility (CSR) is a business approach that views respect
for ethics, people, communities and the environment, as an integral strategy that increase
value added, and thus, improves the competitive position of a firm. It is a comprehensive
set of policies, practices and programmes that are integrated throughout business
operations and decision making processes.

Dare (2004) noted that, there is a growing global trend towards both government
mandated and voluntary corporate disclosure of information on the environmental,
labour, human rights, and social impacts of business practices. The goal of this reporting
grouped here under the rubric of Corporate Social Responsible (CSR) reporting, is to
generate new and better information on the performance of Nigerian money deposit
banks. This is aimed at supporting more informed decision-making by key shareholders,
and ultimately to create new incentives for banks to reduce adverse impacts of their
Over the past decade; a growing number of banks have recognized the business
benefits of Corporate Social Responsible (CSR) policies and practices. Their
experiences are bolstered by a growing body of empirical studies that CSR has a positive
impact on business economic performance and is not detrimental to shareholder value.

Banks also have been encouraged to adopt or expand CSR efforts due to the result of
pressures from customers, suppliers, employees, communities, investors, activist
organizations and other stakeholders. As a result, CSR has grown dramatically in recent
years, with banks of all sizes and sectors developing innovative strategies. Banks have
come to realize that CSR is good for business, since it increase productivity, contribute
to competitiveness and creates a positive corporate image in the eyes of consumers,
investors, employees and community at large.

By the same token, socially responsible business, with a purpose beyond making
profit, can have a positive social, economic and environmental impact by helping to
improve working and surrounding conditions. Corporate Social Responsibility could be
viewed as a symbolic relationship that exists between a firm and all the stakeholders.
Ramanathan (1976), stated that there exist a social contract between the organization and
society. Jaggi and Zhao (1996), agreed with the social view when they argue that
organization do not exist in a vacuum, but are part of society, which creates and support
them. They affirm that social environment is a part of the total environment in which
business operates.

Researchers have shown that being socially responsible improves business
financial health. Its reputation is promoted thereby providing it with an edge over its
competitors (Nendu and Urieto, 1988).
In addition, the Federal Government of Nigeria decided to set up the Federal
Environmental Protection Agency (FEPA) as stipulated in Decree 58 of 1988 to protect

the potential dangers that industrial activities may pose to the environment and the
society at large, (Obeya, 1991). This Decree was later amended by Decree 59 of 1992. It
was this decree that created the first provided guidelines for environmental regulation in

1.2 Statement of the Problem

Nigeria is a former crown colony of Britain and almost every law has been
inherited from the British. Financial reporting in Nigeria is guided mandatorily by the
Companies and Allied Matter Act (CAMA) 1990, the Statement of Accounting
Standards issued by the Nigeria Accounting Standards Board, the Banking Act 1991 (for
banking institutions) the Insurance Act 1993 (for insurance Banks) the Income Tax
Ordinance 1984 (for all banks and public enterprises), the Security and Exchange Rules
and Regulation 1990 (for public limited banks) and Stock Exchange Rules and

As far as Corporate Social Responsibility is concerned, most of the compelling
pressures mounted on organization to engage in CRS may not necessary applicable to
banks operating in Nigeria. Local consumer and civil society pressures are almost non
existent and law enforcement mechanisms have been weak and inefficient (Limbs and
Fort, 2000; Oyejide and Soyibo, 2001, and Ahunwan, 2002).
According to Idoko (1998) despite the fact that Corporate Social Responsibility is
increasingly being recognized as an effective means of decreasing costs and

strengthening market share, there has been reluctance by many Deposit Money Banks in
Nigeria to adopt these practices for a number of reasons. First, many banks do not fully
understand what Corporate Social Responsibility is or how it can be practiced to
improve their bottom lines and reduce risk and liabilities. Second, there are few local
experts in Nigeria that could assist banks to implement Corporate Social Responsibilities
measures, making the cost of consulting prohibitive, especially for smaller businesses.
Third, transparency and disclosure of information has generally not been a requirement
from governments and shareholders in Nigeria.

If these banks want to compete in the global market place, however, they must
begin making changes and incorporating Corporate Social Responsibility measures. It is
against this backdrop that this study is undertaken in an attempt to ascertain the impact
of Corporate Social Responsibility on the performance of Nigerian Deposit Money

1.3 Objective of the Study

The main objective of the study is to examine the impact of corporate social
responsibility on the performance of Nigerian Deposit Money Banks. Other specific
objectives include:
1. To find out the impact of charitable contribution on return on equity of Nigerian
Deposit Money Banks.

2. To determine the effect of community corporate social responsibility on return
of equity of Nigerian Deposit Money Banks.
3. To find out the impact of human resources management on return on equity of
Nigerian Deposit Money Banks.

1.4 Research Hypotheses

In line with the objectives of the study, the following hypotheses were formulated
in null form:
1. Charitable contribution has no significant impact on the return on equity of
Nigerian Deposit Money Banks.
2. Community Corporate Social Responsibility has no significant impact on the
return on equity of Nigerian Deposit Money Banks.
3. Human Resources Management has no significant impact on the return on equity
of Nigerian Deposit Money Banks.

1.5 Significance of the Study

Corporate Social Responsibility reporting assumes that the banks are socially
conscious to discharge their social obligations for the well being of the stakeholders and
society in general. Hence this study will be relevant to the following groups of people:
i. Governments and its agencies will find the work very interesting as it will help
strategize effective ways of regulating environmental, labour and social impacts
of industry. Governments appear to be particularly interested in disclosure system

that may also be more cost effective, flexible, and decentralized, and that build on
market mechanism and public participation.
ii. The study will benefit the consumers since they are among the public that have
growing concern about the environmental and social impacts of the products they
buy, the places they work and the communities they live in, which led to new
demands for corporate disclosure.
iii. Investors have increasingly urge banks to demonstrate their social and
environmental performance to investors – both traditional mainstream investors
and growing numbers of socially responsible investors will highly benefit from
this study.
iv. Corporate organization will find the study useful in the process of developing
reporting systems, measuring performance, and tracking changes over time can
support the development of information systems that improve internal
management of risks, stakeholders etc.
v. The study will add to the empirical evidence on Corporate Social Responsibility
and accountability literature in Nigeria.

1.6 Scope of the Study

The study title Corporate Social Responsibility and Performance of Deposit
Money Banks in Nigeria was designed to cover a period of five years (2004 – 2008).
Due to circumstances beyond our control, the study focused on 9 banks out of the 20
banks listed in the Nigerian Stock Exchange


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