Background of the Study
Corporate Social Responsibility (CSR) has become an integral aspect of business operations worldwide. It involves initiatives that companies undertake to address social, environmental, and economic issues in the communities they serve. For banks in Nigeria, CSR activities often include investments in education, healthcare, infrastructure, and environmental sustainability. These activities are not only aimed at fulfilling ethical obligations but also at enhancing corporate image and building customer loyalty (Adebayo & Olanrewaju, 2024).
United Bank for Africa (UBA) Plc is renowned for its CSR initiatives, including its contributions to community development and sustainability projects. While CSR expenditure may not yield direct monetary returns, it has been argued that it positively influences financial performance through improved brand reputation, increased customer base, and enhanced stakeholder trust. This study investigates the relationship between CSR expenditure and financial performance, using UBA Plc as a case study.
Statement of the Problem
The debate over the impact of CSR on financial performance is ongoing, with contrasting views in literature. Critics argue that CSR expenditure diverts resources from profit-generating activities, while proponents believe it enhances financial performance through long-term benefits.
For UBA Plc, significant investments in CSR raise questions about their tangible impact on profitability and shareholder value. This study evaluates the correlation between CSR spending and financial performance indicators such as return on assets (ROA) and return on equity (ROE) (Eze & Adegbite, 2023).
Objectives of the Study
To assess the impact of CSR expenditure on the financial performance of UBA Plc.
To analyze the relationship between CSR initiatives and customer loyalty in the banking sector.
To identify challenges in integrating CSR practices with financial performance goals.
Research Questions
How does CSR expenditure affect the financial performance of UBA Plc?
What is the relationship between CSR initiatives and customer loyalty in Nigerian banks?
What challenges are faced in aligning CSR practices with financial performance?
Research Hypotheses
CSR expenditure has a significant positive impact on the financial performance of UBA Plc.
CSR initiatives are positively correlated with customer loyalty in Nigerian banks.
Challenges in aligning CSR practices with financial goals reduce their effectiveness.
Scope and Limitations of the Study
The study focuses on UBA Plc’s CSR activities from 2015 to 2025, analyzing their financial implications. Limitations include reliance on publicly available data and challenges in quantifying non-financial benefits of CSR.
Definition of Terms
Corporate Social Responsibility (CSR): Business practices that contribute to sustainable development by delivering social, environmental, and economic benefits.
Financial Performance: Metrics such as profitability, liquidity, and solvency that measure a company’s financial health.
UBA Plc: United Bank for Africa, a leading Nigerian bank known for its CSR initiatives.
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