Corporate social responsibility expenditures and its impact on financial performance variables of listed commercial banks in Nepal

Abstract

Financial institutions, such as banks, hold significant position in the economy and are subject to increasing expectations from shareholders. As a result, it is crucial to understand how CSR influences the financial aspects of banking operations. Corporate social responsibility (CSR) is often viewed as a self-regulatory approach that is incorporated into the business models of companies and organizations. The primary objective of this research is to evaluate the impact of CSR on the financial performance of various commercial banks in Nepal. The study utilizes data from all commercial banks in Nepal over a three-year timeframe, spanning from 2020 to 2022. For many businesses, CSR serves as a forwardthinking business strategy and marketing tool that aids in achieving a competitive edge. Research results have demonstrated a notable and substantial influence of CSR on ROA and EPS. However, we found no relationship of CSR expenses on commercial banks’ ROE. Most of the research on corporate social responsibility focuses on established companies and countries, while developing nations like Nepal receive minimal attention. The findings of this study significantly add to the existing knowledge and provide crucial insights for policy makers and governance of financial sector.