Title: CORPORATE SOCIAL RESPONSIBILITY AND FIRM PERFORMANCE: EVIDENCE FROM BANKS IN GHANA
Author:
Edmund Benjamin-Addy
Abstract:
CSR has developed as a crucial aspect of organizational strategy worldwide, as businesses increasingly incorporate social and environmental factors into their decision-making procedures. In developing economies like Ghana, the banking sector plays an essential role in economic development, making it important to examine how CSR initiatives affect firm performance. The research examines the connection between CSR activities and firm performance of Ghanaian banks. Adopting an explanatory alongside quantitative research approach, the study utilizes secondary data from 7 banks spanning 2007 to 2022. The data were analyzed using STATA and Microsoft Excel, with Panel Corrected Standard Errors (PCSE). Our results indicate that CSR exhibits a positive but statistically insignificant association with profitability. Additionally, results demonstrate a negative but insignificant relationship CSR and firm value. However, financial leverage does not significantly enhance the relationship between CSR and profitability. Given the study’s outcome, managers should shift from viewing CSR as a reputational or compliance-driven activity to embedding it within revenue-generating and risk-reducing functions. For instance, CSR initiatives should be integrated into financial inclusion programs, SME financing, green lending, and digital banking outreach, areas that simultaneously create social impact and strengthen long-term asset quality or customer loyalty. Furthermore, regulatory attention should focus on CSR quality and its linkage to prudential outcomes. Regulators may consider incorporating socially aligned lending (e.g., financing environmentally sustainable projects or underserved sectors) into supervisory dialogue, rather than simply encouraging disclosure-based CSR reporting.
Keywords: Firm Performance; Financial Leverage; Profitability; Disclosure- Based.
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