IIARD International Institute of Academic Research and Development

Journal of Accounting and Financial Management (JAFM )

E-ISSN 2504-8856
P-ISSN 2695-2211
VOL. 11 NO. 3 2025
DOI: 10.56201/jafm.vol.11.no3.2025.pg172.185

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Impact of Corporate Social Responsibility on Organizational Performance (A Case of Selected Banks in Nigeria)

Ikwuagwu Henry Chinedu (PhD), Saborogha Uchechi Boneri (PhD), Opara Caroline Akugbor

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Abstract

This study examines the relationship between corporate social responsibility (CSR) and financial performance in Nigerian banks, using return on assets (ROA) and return on equity (ROE) as key indicators. Employing panel least squares regression on data from 2019 to 2023, the results reveal a statistically significant negative relationship between CSR expenditure and both ROA and ROE. Specifically, the coefficient of LOG(CSR) in the ROA model is -0.302233 (p = 0.0022), indicating that a 1% increase in CSR spending leads to a 0.30% decline in ROA. Similarly, the coefficient of LOG(CSR) in the ROE model is -0.167564 (p = 0.0337), suggesting that a 1% rise in CSR investment results in a 0.17% reduction in ROE. These findings suggest that while CSR initiatives contribute to social and environmental sustainability, they may not provide immediate financial returns. High CSR expenditures could divert funds from core banking operations, affecting short- term profitability and shareholder value. However, strategic CSR alignment with financial goals can mitigate these negative effects. Banks should optimize CSR investments by prioritizing initiatives that enhance both corporate reputation and long-term financial performance. This study highlights the need for a balanced approach to CSR, ensuring that social impact efforts support sustainable economic growth.

keywords:

Corporate social responsibility (csr), Financial performance, Return on assets

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