CORPORATE SOCIAL RESPONSIBILITY AND FINANCIAL PERFORMANCE IN THE COMMERCIAL BANKING INDUSTRY IN UGANDA: A CASE STUDY OF UNITED BANK FOR AFRICA UGANDA LIMITED.
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Date
2024-10-08
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Uganda Christian University
Abstract
The research study aimed at studying corporate social responsibility and financial performance in
the commercial banking industry in Uganda. The study was carried out on United Bank for Africa
Uganda Limited. The study had three objectives namely, to establish the effect of ethical activities
on the financial performance of commercial banks, to establish the effect of economic activities
on the financial performance of commercial banks and to establish the relationship between
philanthropic activities and financial performance of commercial banks. The corporate social
responsibilty of the bank was measured using Carroll’s CSR pyramid and financial performance
constituted of loan volume, liquidity, and profitability.
The research adopted a cross-sectional descriptive design, utilizing both correlation and regression
analyses to examine the relationship between corporate social responsibility (CSR) and financial
performance. The study focused on three branches of United Bank for Africa: Headquarters, Forest
Mall Branch, and Ntinda Branch. A total population of 35 employees was targeted, with a sample
size of 32 respondents determined using Krejcie & Morgan (1970). Data collection involved both
primary gathered via online questionnaires and supplemented by interviews, and secondary
sources were gotten online. The collected data were analysed using SPSS software, employing
descriptive statistics, correlation, and regression analyses to interpret the findings.
The study found that ethical CSR activities, have a weak and statistically insignificant impact on
the financial performance of commercial banks in Uganda. Economic CSR activities showed a
positive but insignificant effect on financial performance. In contrast, philanthropic activities, had
a significant and positive impact on financial performance.
The study concluded that ethical CSR activities, have no significant direct impact on the financial
performance of commercial banks, though they are essential for maintaining customer trust.
Economic CSR activities, also showed no immediate financial impact. Philanthropic activities,
however, had a significant positive effect on financial performance. The study recommends that
banks continue focusing on ethical CSR for long-term stability, invest in economic CSR as a
strategic move for future growth, and increase philanthropic activities to boost financial
performance.