Corporate Social Responsibility on Financial Performance: A Study of the Bangladeshi DSE Listed Private Commercial Banks

Fatima Saki

doi:10.52962/ipjaf.2020.4.4.110

Abstract

The fundamental purpose of the study is to examine the impact of corporate social responsibility (CSR) on the financial performance (FP) of Private Commercial Banks (PCBs) in Bangladesh. The study uses a simple random sampling technique. Ten (10) PCBs are selected as samples for the study from the Dhaka Stock Exchange (DSE) listed companies. Statistical analysis tools such as regression, analysis of variance (ANOVA), and correlation are applied to collected data to examine CSR's impact on selected banks' financial performance. In the study, net profit after tax (NPAT), earnings per share (EPS), net asset value per share (NAVPS), return on assets (ROA), return on equity (ROE), and market value per share (MVPS) are considered as dependent variables and the independent variable, corporate social responsibility (CSR). The findings reveal that the EPS, NAVPS and MVPS of the selected banks are significantly influenced by CSR 56.4, 62.0, and 59.8 percent, respectively. In contrast, CSR has an insignificant relationship with NPAT, ROA, and ROE. The study also indicates a high degree positive and statistically significant correlation between CSR and financial performance (EPS, NAVPS, and MVPS). CSR influences financial performance essentially, so considering social benefits, the banks should perform CSR activities emphasizing educational, environmental, and health issues.

Highlights

Corporate social responsibility (CSR) is the internationally regarded concept for responsible corporate behaviour
The study results provided evidence that corporate social responsibility (CSR) activities communicated in corporate annual reports are significantly and positively related to corporate reputation and firm performance
The one-way analysis of variance (ANOVA) Table 1 indicates that the regression model predicts the dependent variable significantly well, except the models 1, 4, and 5

Summary

Introduction

Corporate social responsibility (CSR) is the internationally regarded concept for responsible corporate behaviour. CSR indicates a company's moral and ethical foundations regarding their employees, their competitors, the environment, the economy, and other areas of life that its business affects. CSR describes a company's promise to be liable to its stakeholders- customers and investors and employees, suppliers, communities, regulators, special interest groups, and society. It is the deliberate inclusion of public interest into corporate decision-making and the honouring of a triple bottom line: people, planet, profit (Fontaine, 2013). Corporate social responsibility activities constitute an essential part of doing banking business ethically and with the public interest

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