Relationship between CSR and Financial Performance of Banks (Research Paper Sample)

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CHAPTER ONE
INTRODUCTION
1.1 Background of study
In the recent past, organizations have constantly been looking for new strategies to gain strategic positioning advantage over their competitors in order to increase their customer base and maximize shareholders wealth. One of these strategies is the adoption of corporate social responsibility (CSR) practice.
Werther & Chandler (2010), defines CSR as a concept whereby business organizations consider the interest of society by taking responsibility for the impact of their activities on customers, suppliers, employees, shareholders, communities and other stakeholders as well as their environment. In today’s world, running a business is no longer just considering how to make profits but also includes bearing certain responsibilities to the society. Banking industry has highly been rated as one of sectors that has adopted this concept had has shown return. Yuen et al. (2007) found that banks need to adapt to changing value of their customers by seeking long term relationship so as to survive and grow.
The banking industry in Kenya has emerged as one of the fast growing sector in the economy. The banking industry is governed by the Companies Act, the Banking Act, and the Central Bank of Kenya (CBK). Banks in Nyeri County has made a deliberate effort to demonstrate leadership in Corporate Social Responsibility initiatives. As a responsible corporate citizens, the banks have introduced social programs responsive to the needs of the society within which they operate. A list of well thought out CSR programs being run by the banks , for example Equity bank, through Equity foundation is involved in CSR activities that include education and leadership development among students from Nyeri county, financial literacy and access of business startups grants, entrepreneurship, agriculture, Health,