ABSTRACT
The focus of this project is to elucidate the Impact of Corporate
Social responsibility on the Profitability of the Nigerian Banking Sector. As a
matter of fact Corporate Social Responsibility (CSR) as a concept entails the
practice where by corporate entities voluntarily integrate both social and
environmental upliftment in their business philosophy and operations. For
comprehensive understanding, this project is presented in five chapters.
Chapter one include the introduction, chapter two comprise of the literature
review, chapter three contain the research methodology, chapter four contains
the result and discussions while chapter five contains the summary, conclusion
and recommendation.
TABLE OF
CONTENTS
TITLE PAGE i
CERTIFICATION ii
DEDICATION iii
ACKNOWLEDGEMENT iv
ABSTRACT v
TABLE OF CONTENT vi
CHAPTER ONE
BACKGROUND OF THE STUDY
1.
Statement of the problem
2.
Research question and Hypothesis
3.
The purpose of the study
4.
Scope of the study
5.
Limitation of the study
6.
The significance of the study
7.
Definition of terms
CHAPTER TWO
REVIEW OF RELATED LITERATURE
1.
Introduction
2.
Conceptual framework of corporate social responsibility
3.
Theoretical framework of corporate social
responsibility
4.
Argument for and against corporate social
responsibility
5.
The concept of corporate social responsibility in the
Nigeria banking sector
6.
Theories of value orientation of corporate social
responsibility
7.
Issues of corporate social responsibility of the
Nigerian banks
CHAPTER THREE
RESEARCH METHODOLOGY 22
1.
Research design
2.
Area of study
3.
Population of the study
4.
Sample and sampling procedure
5.
Instrument for data collection
6.
Method of data collection
7.
Method of data analysis
CHAPTER FOUR
DATA ANALYSIS AND INTERPRETATION
1.
Introduction
2.
Data presentation and analysis
3.
Questionnaire to external stakeholders
4.
Test of hypothesis
5.
Analysis of secondary data
CHAPTER FIVE
SUMMARY, CONCLUSION RECOMMENDATION 35
1.
Summary of finding
2.
Recommendation
3.
Conclusion
References
Appendix
CHAPTER ONE
INTRODUCTION
1.1 Background of the
Study
Corporate Social Responsibility
(CSR) as a concept entails the practice whereby corporate entities voluntarily
integrate both social and environment upliftment in their business philosophy
and operations. A business enterprise is primarily established to create value
by producing goods and services which society demands. The notion of Corporate
Society Responsibility (CSR) is one of ethical and moral issues surrounding
corporate decision making and behaviour, thus weather a company should
undertake certain activities or refrain from doing so because they are
beneficial or harmful to society is a central question. Social issues deserve
moral consideration of their own and should lead managers to consider the
social impacts of corporate activities in decision making regardless of any
stakeholders’ pressures. However, some argument that the contribution of
concepts such as Corporate Society Responsibility (CSR) is just a reminder that
the search for profit should be constrained by social considerations (Manuel and Lúcia, 2007) and
increasingly Corporate Society Responsibility (CSR) is analysed as a source of competitive
advantage and not as an end in itself (Branco and Rodrigues, 2006).
Today, managers of Nigerian banks
have found a need that the environment in which they operate should be provided
for because their intermediate and macro environments have a direct impact on
the attainment of the corporate goals, objectives and mission statement. The
purpose of all profit-making organizations, and even the non-profit making organizations,
is to maximize profit and in turn minimize cost, through optimal utilization of
available resources to achieve the best results they are capable of.
Profitability is an important factor to all banks, because it is one of the
major purpose for which the banks are established.
Corporate Society Responsibility
(CSR) involves a business identifying its stakeholder groups and incorporating
their needs and values within the strategic and day-to-day decision-making
process, thus a means of analyzing the inter-dependent relationships that exist
between businesses the economic systems and the communities within which they
are operating. Corporate Society Responsibility (CSR) is a means of discussing
the extent of obligations a business has to its immediate society; a way of
proposing policy ideas on how those obligations can be met; as well as a tool
by which the benefits to a business for meeting those obligations can be
identified (Corporate Society Responsibility Guide). Corporate Society
Responsibility (CSR) is also referred to as ‘corporate’ or ‘business
responsibility’, ‘corporate’ or ‘business citizenship’, ‘community relations’,
‘social responsibility’.
The
Nigerian banks seek to conduct Corporate Society Responsibility (CSR) so that
they meet there financial, social and environmental responsibilities in an
aligned way, their financial, social and environment responsibilities in an
aligned way. At its core, it is simply about having a set of values and
behaviours that underpin its everyday activities, its transparency, its desire
for fair dealings, its treatment of people, its attitudes towards and treatment
of its customers and its links into the Community. As a result, the
environmental aspect of Corporate Society Responsibility (CSR) is seen as the
duty to cover the environmental implications of the company’s operations,
products and facilities, eliminate waste and emissions, maximize the efficiency
and productivity of its resources, reward for externalities and minimize unethical
practices that might adversely affect the enjoyment of the country’s resources
by future generations. In the emerging global economy, where the Internet, the
news media and the information revolution shed light on business practices
around the world, companies are more frequently judged on the basis of their
environmental stewardship (CIBN). Partners in business and consumers want to
know what is inside a company. This transparency of business practices means
that for Nigerian banks, Corporate Society Responsibility (CSR) is no longer a
luxury but a requirement.
Mazurkiewicz (2004) recognizes
that concept has been developing since the early 1970s. There is no single,
commonly accepted definition of “Corporate Social Responsibility” (CSR); there
are different perceptions of the concept among the private sector, governments
and civil society organizations. Depending on the perspective, Corporate
Society Responsibility (CSR) may cover:
a) A company running its business
responsibly in relation to internal stakeholders
(shareholders, employees,
customers and suppliers);
b) The role of business in
relationship to the state, the nationa, as well as to global
institutions or standards; and
c) Business performance as a
responsible member of the society in which it operates and the
global community.
The first perspective includes
ensuring good corporate governance, product responsibility, employment
conditions, workers rights, training and education. The second includes
corporate compliance with relevant legislation, and the company’s
responsibility as a taxpayer, ensuring that the state can function effectively.
The third perspective is multi-layered and may involve the company’s relations
with the people and environment in the communities in which it operates, and
those to which it transacts business. Too often, attaining Corporate Society
Responsibility (CSR) is understood from the perspective of business generosity
to community projects and charitable donations, but this fails to capture the
most valuable contributions that a company has to make (Reyes 2002).
Simply, many companies have found
that Corporate Society Responsibility (CSR) has often had a positive impact on
corporate profits. Of all the topics related to corporate social
responsibility, it is environmental initiatives that have produced, so far, the
greatest amount of quantifiable data linking proactive companies with positive
financial results. Business for Social Responsibility (BSR), for example,
emphasizes that investment in Corporate Society Responsibility (CSR) has
promoted product differentiation at the product and firm levels. Some firms now
produce goods and services with attributes or characteristics that signal to
the consumer that this particular company is concerned about certain social and
environmental issues.
Corporate Social Responsibility
in Nigeria Banking Sector would be aimed at addressing the peculiarity of the
socio-economic development challenges of the country (e.g. poverty alleviation,
health care provision, infrastructural development, education, etc) and would
be informed by socio-cultural influences (e.g. communalism and charity). They
might not necessarily reflect the popular western standard or expectations of
Corporate Society Responsibility (CSR) (e.g. consumer protection, fair
practice, green marketing, climate change concerns, socially responsible
investments, etc). As a result of the effect of the global economic meltdown
the Central Bank of Nigeria (CBN) regulatory policies on the banking activities
which led to the recent replacement of some Nigerian banks’ Chief Executive
Officers even after the 89 banks that had hitherto existed in Nigeria were
reduced to 25 in 2006. While 76 of them merged into the 25 mega banks, 13 banks
were liquidated as an outcome of the implementation of the N25 billion minimum
capital base for banks, the first phase of the most extensive and intensive
banking reforms in post-independence Nigeria. There is no doubt that Corporate
Society Responsibility (CSR) is becoming indispensable, though involuntary, in
the contemporary business world as societal needs are making it imperative for
the corporate organisations to be sensitive to happenings in their
environments, which ensure more understanding and good relationship between the
organisation and the society where they exist, since Corporate Society
Responsibility (CSR) contributes to the wellbeing of the citizenry (Osho 2008).
1.2 Statement of the Problem
With the new “competent and
competitive players,” the Nigerian banking system is now driven by advanced
competition brought about by globalization, deregulation of financial services,
recent replacement of some banks’ Chief Executives, astronomical development in
Information and Communication Technology (ICT), among others, to render
services according to cost-benefit criteria. Banks in Nigeria perceive and
practice Corporate Social Responsibility as a corporate philanthropy aimed at
addressing socio-economic development challenges. What impact does this have on
the profitability of the bank?
1.3 Research Question and
/or Hypothesis
The following questions would be examined during the course of this
study:
i) Does First Bank of
Nigeria Plc embark on Corporate Social Responsibility?
ii) What impact doeds Corporate Social Responsibility have on
the bank’s profitability?
iii) What challenges if any does Corporate Social Responsibility
impose on the bank?
iv) Does Corporate Social Responsibility guarantee the customers’
confidence level and security of depositor’s fund?
v) Are there other benefits FBN PLC stands to gain aside
profitability from the execution of Corporate Social Responsibility?
1.4 The Purpose of the Study
The main aim of this study to
examine the impact Corporate Social Responsibility of First Bank of Nigeria PLC
vis-à-vis its profitability. The study is essentially geared towards achieving
the following objectives:
I.
To examine Corporate Social Responsibility in relation
to banks in Nigeria with FBN plc in focus.
II.
To evaluate the impact of Corporate Social
Responsibility on the profitability of the Nigerian banking sector.
III. To
examine the challenges of Corporate Social Responsibility in the Nigerian
banking sector.
IV. To
investigate whether Corporate Social Responsibility guarantee customers’
confidence and security of depositor’s fund.
1.5 Scope of the Study
The study is focused on the
headquarters of First Bank of Nigeria PLC. It critically examines what impact
Corporate Social Responsibility has on the profitability of First Bank of
Nigeria PLC.
1.6 Limitation of the Study
The major limiting factor of this
research work is time constant, the staff who is to give the necessary
information as to the impact of Corporate Social Responsibility in Nigeria
Banking Industry is not always available.
1.7 The Significance of the
Study
The study is expected to make
contribution to knowledge in the following areas:
I.
Provision of information about Corporate Social Responsibility
to corporate institution especially the Nigerian banking sector.
II.
Provision of a fundamental material for scholarly
discourse in management science relating to Corporate Social Responsibility.
III. Assisting
in providing information on the impact of Corporate Social Responsibility on
the profitability of Nigerian banking sector.
IV. Provision
of information on the challenges of Corporate Social Responsibility in the
Nigerian banking sectors and recommendations.
V.
Provision of reference points for future research on
the topic under study.
1.8 Definition of Terms
In this study it will be
significant to clarify conceptually the keyword used in the study, for better
understanding of the research work.
I.
Corporate Social
Responsibility: - It entails the practice whereby corporate entities
voluntarily integrate both social and environment upliftment in their business
philosophy and operations.
II.
Stakeholders: -
They are group of individuals who are affected or indirectly by organization
pursuit of goals. There are two categories of stakeholders, internal
stakeholders which owners, employees and stockholders and external stakeholders
such as suppliers, competitors, public interest association, protest group and
government agencies.
III. Profit – making organization: - Is an
organization setup with a view of transitory businesses with the government or
non-government organization mainly to make profit.
IV. Non- profit making organization: - This
is an organization that is charitable in order to better the lots of
masses.