ASSESSMENT OF THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY ON FINANCIAL PERFORMANCE OF THE BANKING INSTITUTION
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ASSESSMENT OF THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY ON FINANCIAL PERFORMANCE OF THE BANKING INSTITUTION
Chapter one
INTRODUCTION
1.1 Background of the Study
The majority of Nigerian financial firms now practise corporate social responsibility. It is one of the most recent management techniques in which organisations strive to make a beneficial impact on society while conducting business.
Holme and Watts (2000) described CSR as a business’s ongoing commitment to act ethically and contribute to economic development while improving the quality of life of its employees and their families, as well as the local community and society at large.
Businesses can employ ethical decision-making to secure their operations by allowing government bodies to reduce their engagement in the organisation. Several theories have been proposed to explain why business institutions voluntarily participate in social activities.
Most corporations engage in social activities to meet their primary demand of presenting themselves as legitimate members of society (Bowen, 1953). This legitimacy has encouraged businesses to focus on their core goal of achieving long-term profitability.
Aside from the reality that the corporate sector delivers considerable economic benefits to society, there are rising worries that wider society gives many chances for companies to exploit public resources to run their enterprises (Carroll, 1979).
Some experts believe that most rules and regulations are developed in response to public uproar, which threatens profit maximisation and thus shareholder well-being, and that if there was no outcry, there would be minimal regulation (Carroll, 1999). A company is not socially responsible if it simply follows the minimum requirements of the law, as a good citizen would do.
Sustainable development and poverty reduction are widely seen as critical challenges that governments, particularly in developing countries, must address. However, the government cannot fulfil this goal without the assistance of the business sector.
Policymakers are paying close attention to the private sector’s potential contribution to these policy goals. As the topic of sustainable development becomes more relevant, CSR becomes an aspect that tackles these issues, making it increasingly important in the daily operations of financial institutions in the banking business.
According to Pranjali (2011), the World Business Council for Sustainable Development (WBCSD) defines CSR as a contribution to long-term economic development. It is stated that there is no way to avoid paying serious attention to corporate social responsibility because the costs of failure are simply too high.
There are several win chances waiting to be discovered: every action in a company’s value chain intersects with social variables in some manner, from how you buy or procure to how you do research, but relatively few businesses have considered this.
The idea is to use your company’s unique strengths to promote social causes while also improving your competitive situation. According to Michael Porter (2005), the job of today’s leaders is to stop being defensive and begin thinking systematically about corporate responsibility.
Successful executives and leaders understand that CSR is unavoidable and that their long-term success is dependent on maintaining positive relationships with society.
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