Corporate social responsibility and performance among rural banks in Ghana: the moderating role of governance structures

Abstract

PurposeThis paper evaluates the effect of corporate social responsibility (CSR) on the performance of rural banks, as well as the moderating influence of effective governance on the surmised nexus.Design/methodology/approachAnnual data for 122 Ghanaian rural banks from ARB Apex Bank, World Development Indicator (WDI) and World Governance Indicator (WGI) for the period 2014–2020 were compiled for analysis. A two-stage system generalized method of moments (GMM) estimator was used in examining the relationships under study.FindingsThe findings suggest that CSR has a significant negative effect on return on assets (ROA), return on equity (ROE) and stability (Z-score). On the other hand, further results showed that CSR positively influences net interest margin (NIM). Again, the results suggest that government effectiveness exerts a positive moderating influence on the effect of CSR on performance from all four measurement criteria (ROA, ROE, NIM and Z-score) in the Ghanaian rural banking sector.Originality/valueThe study focuses on the rural banking sector in the Ghanaian economy, compared to related studies that examine the subject matter for commercial banks. The moderating influence of governance structures is also assessed on the relationships to guide policy on rural banking.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-02-2023-0116.