TABLE OF CONTENTS DECLARATION………………………………………………………………..ii ABBREVIATIONS…………………………………………………………… iv ABSTRACT……………………………………………………………………….v

TABLE OF
CONTENTS

DECLARATION………………………………………………………………..ii

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ABBREVIATIONS…………………………………………………………… iv

ABSTRACT……………………………………………………………………….v

CHAPTER ONE: INTRODUCTION………………………………….vi

1.1 Background of
the Study…………………………………………………vi

1.1.1 Corporate
Social Responsibility…………………………………….vii

1.1.2 Financial Performance…………………………………………………..vii

1.1.3 CSR and
Financial Performance…………………………………….viii

1.1.4 Commercial
Banks in Kenya…………………………………………viii

1.2 Research Problem……………………………………………………………ix

1.3 Objectives of
study…………………………………………………………..x

1.3.1 General Objective………………………………………………………….x

1.3.2 Specific Objectives………………………………………………………..xi

1.4 Value of the Study…………………………………………………………..xi

 

 

 

 

 

ABBREVIATIONS

CSR               Corporate Social Responsibility

SPSS              Statistical Package for Social
Sciences

KCB               Kenya Commercial Bank

ROI               Return on Investment

CBK              Central Bank of Kenya

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ABSTRACT

Businesses
do not exist in a vacuum. They exist in a society with people who learn to
embrace the businesses as part of them. Corporate social responsibility is a
way of giving back to the society by the businesses as a way of appreciating
the society who are their consumers as well. By doing so, the corporations gain
by having favorable public view thus in a way increase their profitability by
having more consumers consume their products. This study seeks to establish the
effects of CSR on financial performance of commercial banks in Nakuru with
focus on education, health and environmental CSR activities. Primary data will
be used which will be collected using questionnaires and interviews. The
descriptive research design will be used to find the relationship between
corporate social responsibility and financial performance. The data collected
will be run through the Statistical Package for Social Sciences (SPSS) and then
presented via tables and figures. The data will be based on a five year period
from 2013 -2017.Through the study, corporations will understand the importance
of CSR and how it affects their financial performance.

 

 

 

CHAPTER ONE: INTRODUCTION

1.1  
Background
of the study

Since
time immemorial, CSR has been in existence paving way for organizations to have
moral, philanthropic, ethical and legal responsibilities. It is the constant
commitment by firms to contribute to economic development and behave ethically
as they improve the quality of life of the members of society in which the
company exists in, (Holme and Watts, 2000). (Matterson and Metivier, 2016)
argued that CSR is a triple bottom line. The theory assumes that a company is
also a member of society which consequently hands it moral responsibility. Some
multinational companies have well established CSR programs that operate as
independent entities such as MasterCard Foundation, Equity Foundation and KCB foundation.
There are many benefits of engaging in CSR such as: it enhances market
sustainability, it serves as a building stone upon which the firms’ social
progress is able to be seen in a fast changing world (Siegel and Vitaliano,
2007).Good CSR enhances the company and brand reputation, (Philip 2005),
increases customer interest as people tend to be involved more with a firm with
good social performance. Sectors such as health, education and the environment
at large benefits from CSR by improvement of schools, fee funds, medical
assistance better recycling and protection of the environment.

1.1.1   
Corporate
Social Responsibility

CSR
can be defined as a means through which organizations give back to the society.
It is a promise to improve the quality of life of society members through
discretionary business practices and contributions of corporate resources
(Kotler and Lee 2011a)

CSR
involves four pillars 🙁 a) Legal responsibility whereby the firm has a mandate
to follow the set rules and regulations in the area of jurisdiction that the
firm exists in. Failure to do so may result to heavy penalties and fines or
legal action. (b) Economic responsibility which is the main aim of the firms
that is to make profit and increase in value.(c) Ethical responsibility which
requires firms to do the right thing at all times.(d) Philanthropic
responsibility which is about contributing to the society’s development even if
it is independent to the firms activities (Matterson and Metivier 2016)

1.1.2   
Financial
performance

It
is the act of performing financial activities and the extent to which financial
objectives are being achieved. Monetary terms are the measure against which the
firms policies are measured.

There
are accounting tools used to measure the financial performance of a firm such
as ROI, which enables the results to be compared against other firms to check
how the firm is doing against its competitors in the same or similar market.

1.1.3   
CSR
and financial performance

Managers
believe that constant CSR will enable the firm to have respect in the market
place and also it enables the firm to have more sales and also it attracts more
qualified staff who would wish to be associated with a firm with good CSR which
will subsequently improve the firm’s financial performance (Robins,2015)

(Kanwal
et al., 2013) states that, there is a positive relationship between CSR and
performance of the organization financially. Thus spending on CSR activities
now ensures sustainability of the firm in the long term as well as improvement
of financial performance.

1.1.4   
Commercial
banks in Kenya

Commercial
banks in Kenya are regulated by the CBK which oversees the banks to ensure they
comply with the law. The banking sector in Kenya has undertaken several
regulatory and financial reforms in the past. These reforms have enabled the banking
sector to attract many foreign banks to enter the Kenyan market (Irungu 2103)

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