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THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY _CSR

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THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY _CSR Powered By Docstoc
					                              CHAPTER 1

                              INTRODUCTION

1.1      BACKGROUND INFORMATION

      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 present-day conception of corporate social responsibility (CSR) implies that

companies voluntarily integrate social and environmental concerns in their op-

erations and interaction with stakeholders. The notion of CSR is one of ethical and

moral issues surrounding corporate decision making and behaviour, thus if 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 arguments that the contribution of concepts such as CSR

is just a reminder that the search for profit should be constrained by social

considerations (Manuel and Lúcia, 2007) and increasingly CSR is analysed as a

source of competitive advantage and not as an end in itself (Branco and Rodrigues,

2006). In effect, the concept of CSR has evolved from being regarded as detrimental


                                           1
to a company‘s profitability, to being considered as somehow benefiting the

company as a whole, at least in the long run.

   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.

   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. 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 (CSR Guide). CSR is also referred to as ‗corporate‘ or

‗business responsibility‘, ‗corporate‘ or ‗business citizenship‘, ‗community

relations‘, ‗social responsibility‘. It involves the way organisations make business

decisions, the products and services they offer, their efforts to achieve an open and
                                            2
honest culture, the way they manage the social, environmental and economic

impacts of business activities and their relationships with their employees,

customers and other key stakeholders having interest in the Business and its

operations. The motivations to engage in CSR are varied – response to market

forces, globalization, consumer and civil society pressures, corporate objectives, etc.

The activities of these firms are therefore visible because of their global reach. As

such, there is a higher incentive to protect their brands and investments through

CSR. The CSR activities in this sector are mainly focused on remedy the effects of

their business activities on the local communities. So, the firms operating in this

sector have often provided pipe-borne waters, hospitals, schools, etc.

       The Nigerian banks seek to conduct CSR so that they meet there financial,

social and environmental 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 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
                                            3
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, CSR is no longer a luxury but a

requirement.

       Mazurkiewicz (2004) recognized the 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, 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 and nationally, 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
                                           4
people and environment in the communities in which it operates, and those to which

it transact business. Too often, attaining 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).

       Business for Social Responsibility (BSR) defines CSR as ―operating a

business in a manner that meets or exceeds the ethical, legal, commercial and public

expectations that society has of business. CSR is seen by leadership companies as

more than a collection of discrete practices or occasional gestures, or initiatives

motivated by marketing, public relations or other business benefits. Rather, it is

viewed as a comprehensive set of policies, practices and programs that are

integrated throughout business operations, and decision-making processes that are

supported and rewarded by top management‖.

       Simply, many companies have found that 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 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.
                                           5
       Corporate Social Responsibility in Nigeria Banking Sector would be aimed

towards addressing the peculiarity of the socio-economic development challenges of

the country (e.g. poverty alleviation, health care provision, infrastructure

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 CSR (e.g. consumer protection, fair practice,

green marketing, climate change concerns, social responsible investments, etc) as a

result of the effect of the global economic meltdown and 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 which was the

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.

       Companies are assumed to be socially responsible because they anticipate a

benefit from these actions. Examples of such benefits might include reputation

enhancement, the ability to charge a premium price for its output, or the use of CSR

to recruit and retain high quality workers. These benefits are presumed to offset the

higher costs associated with CSR, since resources must be allocated to allow the

firm to achieve CSR status, while a key indicator to determine the true worth and
                                         6
value of modern organizations is their ability to give back to the society part of their

income through some mutually beneficial initiatives (Nkanbra and Okorite, 2007).

There is no doubt that 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 environment, which

ensure more understanding and good relationship between the organisation and the

society they exist, since CSR contributes to the wellbeing of the citizenry (Osho

2008).

         Gustafson (2006), CSR is one of the most dynamic, complex and challenging

areas that business leaders face today and it is arguably one of the most critical, even

as deregulation and privatization are increasingly gaining ground in most countries

thus bringing private-sector companies under pressure to take active role in making

the society a better place to live in and not only for them.

1.2           STATEMENT OF RESEARCH 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. This has affected banks customers' habits as well, while the increasing

demands for clear and hard facts about the social and environmental performance of
                                            7
banks by an increasingly well-informed breed of stakeholders have made corporate

social responsibility (CSR) the vogue.

Banks in Nigeria perceive and practice Corporate Social Responsibility as a

corporate philanthropy aimed at addressing socio-economic development challenges

(Ademosu, 2008). What impact does this have on the profitability of the bank?

   In the light of the above problems faced by most banks, there is the need to

evaluate how CSR impact on the profitability of the banking sector in Nigeria. The

following questions were designed to probe into the Corporate Social Responsibility

of First Bank of Nigeria PLC and its profitability.

    Does First Bank of Nigeria PLC embark on Corporate Social Responsibility?

    What impact does Corporate Social Responsibility have on the bank‘s

       profitability?

    What challenges does Corporate Social Responsibility impose on the bank?

    Are there other benefits FBN Plc stands to gain aside profitability from the

       execution of corporate social responsibility?

    Does First Bank Corporate Social Responsibility guarantee the customers‘

       confidence level and security of depositor‘s fund?




                                           8
1.3     JUSTIFICATION FOR THE STUDY

The study is expected to make contribution to knowledge in the following areas:

         Provide information about CSR in relation to corporate institution

           especially the Nigerian banking sector.

         A fundamental material for scholarly discourse in management science

           relating to Corporate Social Responsibility.

         Assist in providing information on the impact of CSR on the profitability

           of Nigerian banking sector.

         Provide information on the challenges of CSR in the Nigerian banking

           sectors and recommendations.

         Provide information for future research works on CSR.

1.4     RESEARCH OBJECTIVES

The rationale of this study is to examine the impact of Corporate Social

Responsibility of First Bank of Nigeria Plc vis-a-vis its profitability. The study is

also geared towards achieving the following objectives:

       To examine Corporate Social Responsibility in relation to banks in Nigeria

         with FBN plc in focus.

       To evaluate the impact of Corporate Social Responsibility on the profitability

         of the Nigerian banking sector.




                                           9
       To determine the challenges of Corporate Social Responsibility in the

         Nigerian banking sector.

       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 (considering

the FBN branches in Ilorin). It critically examines what impact Corporate Social

Responsibility has on the profitability of First Bank of Nigeria PLC for the period

2006-2009.




                                          10
                                      CHAPTER 2

                              LITERATURE REVIEW

2.1      REVIEW OF RELEVANT LITERATURE

2.1.1 Definition of corporate Social Responsibility:

A key indicator to determine the true worth and value of modern organizations is

their ability to give back to the society part of their income through some mutually

beneficial initiatives (Nkanbra and Okorite, 2007), these initiatives are encapsulated

in the concept of CSR;

       Wikipedia (September, 2007) defined corporate social responsibility (CSR)

         as ―a concept whereby organizations consider the interests of society by

         taking responsibility for the impact of their activities on customers,

         employees, shareholders, communities, and the environment in all aspects of

         their operations. This obligation is seen to extend beyond the statutory

         obligation to comply with legislation and sees organizations voluntarily

         taking further steps to improve the quality of life of employees and their

         families as well as of the local community and society at large.‖

       Actions that appear to further some social good, beyond the interest of the

         firm and that which is required by law. (McWilliams and Siegel, 2001);

       CSR is what an organization does to contribute to the social, economic,

         political or educational development of the community where it is located,

         but which it is not compelled to do by any law (Ademosu, 2008)
                                           11
   The social responsibility of business encompasses the economic, legal,

      ethical, and discretionary expectations that society has of organizations at a

      given point in time (Archie, 1979)

Almost all the people interviewed described CSR along the lines of

philanthropy and altruism. Some of these descriptions include:

     The corporate act of giving back to the immediate and wider

      community in which organizations carry out their business in a

      manner    that   is   meaningful     and     valuable     and   relevant   to   that

      community‖ (Ajala, 2009) .

   CSR is a way for the companies to reach out to their host

      communities      by    positively        impacting   on     their    environment‖

      (Ogungbayi, 2009).

   CSR is a way of saying ‗thank you‘ to the environment in which they

      operate and a way of also showing a sense of belonging to the

      society at large‖ (Akinloye, 2009).

CSR as philanthropy in Nigeria could also be tied to some religious

influences. Nigeria is a very theistic country. The belief in the supernatural or

some spiritual realities is central to an average Nigerian (Adi, 2006). It can

be argued, therefore, that since gifts and sacrifices are core to religion, the

same beliefs could have easily found an outlet/expression in the Nigerians‘

understanding and practice of business‐society relations.
                                          12
2.1.2 History of Corporate Social Responsibility:


a)     Worldwide perception.

Friedman (2006) said that the great economist and philosopher Adam Smith

expressed in eighteenth century the classical economic model of business which

suggested that the needs and desires of society could best be met by the unfettered

interaction of individuals and organizations in the marketplace.

Industrial Revolution contributed to radical change, large organizations developed

and acquired great power, and their founders and owners became some of the richest

and most powerful men in the world. In the late nineteenth century many of these

individuals believed in and practiced a philosophy that came to be called "Social

Darwinism" (Noyer, 2003). This type of philosophy justified cutthroat, even brutal,

competitive strategies and did not allow for much concern about the impact of the

successful corporation on employees, the community, or the larger society. Around

the beginning of the twentieth century a backlash against the large corporations

began to gain momentum. Between 1900 and 1960 the business world gradually

began to accept additional responsibilities other than making a profit and obeying

the law.

b)     Nigerian perception.

For many years, the concept of corporate social responsibility remained alien to the

Nigerian banking industry, as the overriding emphasis was profit and nothing else.

                                         13
(Amechi, 2007) As at the time in question, banks‘ management never bordered

about the customer or the environment within which business is being operated, and

that created a lot of problems for the various institutions. That was largely because

the customer had little or no option, as the number of banks then was relatively

small. Moreover, the literacy level and consciousness of the bank customers was

quite low and so many things were taken for granted. Indeed times have changed a

great deal and awareness about banks corporate social responsibility has continued

to grow steadily ever since. It is no longer an issue to be toyed with in the policy

making processes in the banks, as policies, products and services can only be

introduced after evaluation and consideration of the responses, from the society and

business environment. There have always been fears that without such

considerations, organizations are bound to record product or service failure. Today,

corporate social responsibility profile of banks is being used as marketing tool in a

competitive industry.

c)     Antecedent of Banking in Nigeria.

The Nigerian Banking Industry (NBI) has evolved over the years. The NBI can be

said to have gone full cycle (Obideyi, 2002). Commencing in 1892, the pioneer

banking company in Nigeria namely the Africa Banking Corporation later (1894)

absorbed by the British Bank of West Africa (BBWA) enjoyed virtual monopoly of

banking business (Obideyi, 2006). This period up to 1952 was characterized by the

absence of banking legislation in Nigeria and also said that anybody could set up a
                                         14
banking company provided he/she is registered under the companies‘ ordinance. The

dominant banking institutions were foreign commercial banks operating mainly to

serve the trade financing requirement of their country‘s industrial sector (Obideyi,

2006). Being foreign based, it was believed that indigenes were discriminated

against in respect of banking credit facilities.

The belief, coupled with ―free-for-all‖ operation environment and ease with which

bank were incorporated-―cases of easy come– easy go‖ was experienced in Nigerian

Banking Sector. In this era banks failed in social responsibility. (Obideyi, 2006).

This problem faced led to the agreement between government officials and

representative of banks that there was need for legislations and establishment of

control measures for banking operation.

The period 1958-1969 witness an era of banking regulations consolidation. It gave

birth to the establishment of and commencement of the Central Bank of Nigeria.

Today the Nigerian Banking Industry is made up of twenty four commercial banks

with First Bank of Nigeria plc recognized by the CBN as one of the leading banks in

the country. (Obideyi, 2006).

   Corporate Social Responsibility (CSR) is part of the business ethics which

accountants and management are concerned with because the interested in the

factors that facts the profitability of the business. Corporate social responsibility

(CSR) can be defined as the "economic, legal, ethical, and discretionary


                                            15
expectations that society has of organizations at a given point in time" Carroll and

Buchholtz (2003).

CSR is a means of analyzing the inter-dependent relationships that exist between

businesses and economic systems, and the communities within which they are

based. CSR is a means of discussing the extent of any 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 (CSR Guide).

McWilliams and Siegel (2001) defines CSR as ―actions that appear to further some

social good, beyond the interests of the firm and that which is required by law‖. The

concept of corporate social responsibility means that organizations have moral,

ethical, and philanthropic responsibilities in addition to their responsibilities to earn

a fair return for investors and comply with the law. A traditional view of the

corporation suggests that its primary, if not sole, responsibility is to its owners, or

stockholders. However, CSR requires organizations to adopt a broader view of its

responsibilities that includes not only stockholders, but many other constituencies as

well, including employees, suppliers, customers, the local community, local, state,

and federal governments, environmental groups, and other special interest groups.

Collectively, the various groups affected by the actions of an organization are called

"stakeholders."


                                            16
But are these goals compatible with the business objectives which are the first

priority of an enterprise? In a way, CSR challenges businesses to attend to, and

interact with, the firms‘ stakeholders while they pursue economic goals.

Consequently CSR is frequently linked to such constructs as business ethics,

corporate citizenship, stakeholder engagement, sustainable development, corporate

governance, sustainable finance, social responsible investment, et cetera (Amaeshi

and Adi, 2007).

2.2    Conceptual framework of Corporate Social Responsibility.

       Carroll (1991) argues that there are four categories of corporate social

responsibilities which can be depicted as a pyramid, in which economic

responsibilities is the foundation upon which all other responsibilities are predicated

and without which they can not be achieved, and discretionary responsibilities are

the apex (Figure 1). Notwithstanding, companies are expected to fulfill these four

social responsibilities simultaneously. An important consideration regarding this

perspective is that, contrary to the common belief that economic responsibility is

related to what the companies do for themselves, and the other responsibilities are

related to what they do for others, ―economic viability is something business does

for society as well‖ (Carroll, 1999).

Matten et al. (2003) underline the centrality of the ethical and philanthropical areas

of responsibility to the study of CSR because of the differentiation they allow to

establish between voluntary corporate behaviour and mere compliance. The CSR
                                          17
debate has focused on the moral and philanthropic responsibilities, giving little

attention to economic and legal responsibilities. In this article, the term CSR will

also be used to refer to ethical and philantropical responsibilities of business.

An important and recent addition to the discussion of Carroll‘s model was offered

by Carroll himself in Schwartz and Carroll (2003). These authors develop a three-

domain approach, in which they propose the subsumption of the philanthropic or

discretionary component under the ethical and/or economic components. The

reasons for such proposal are related, on the one hand, to the difficulty in

distinguishing between ―philanthropic‖ and ―ethical‖ activities on both the

theoretical and practical levels, and, on the other hand, to the observation that phil-

anthropic activities are often explained by underlying economic interests.


Carroll (1991) explained that the conceptual framework of CSR in a pyramid:

(figure 1):




                                           18
Economic Responsibility: According to Adeoti (2006), economic responsibility is

the bed rock of all responsibilities and the foundation of all CSR, which if not

achieved other responsibility will not be attained. This responsibility emphasizes the

reason for business establishment. According to Carroll (1991), a business first

responsibility is to an economic institution, that is, it should be an institution whose

orientation is to identify customers‘ needs and provide these needs with a view of

making profit.

Legal Responsibility: Adeoti (2006) says that the company is to comply with

established laws by government. The law reflects a view of codified ethics that



                                          19
embody basics notion of fairness established by the government. Such laws include

payment of taxes, environmental protection and other.

Ethical Responsibility: Ethical responsibility emphasizes the activities and practices

expected by the society members, which includes complying with the norms in areas

which they operate. (Adeoti 2006)

Philanthropic Responsibility: Carroll (1991) said that business is expected to be a

good corporate citizen. This is captured in the philanthropic responsibility, wherein

business is expected to contribute financial and human resources to the community

and to improve the quality of life. Philanthropic responsibilities are business

voluntary or discretionary responsibility, this responsibility shows the human side of

the organization.

Nickel et al (2002) explains that Corporate Social Responsibility has several

dimensions,

        Corporate philanthropy: This is the dimension of CSR that includes

          charitable donations.

        Corporate Responsibility: Dimension of social responsibility that includes

          everything from hiring minority workers to making safe products.

        Corporate Policy: This refers to the position a firm takes on social,

          politics and political issues.




                                           20
Wartick and Cochran (1985) presented a ―Corporate Social Performance Model‖

which also integrates three areas: the principles of CSR (using Carroll‘s four

categories of social responsibilities as ―principles‖); the processes of corporate

social responsiveness (reactive, defensive, accommodative, and proactive); and the

policies developed to address social issues (social issues management). A summary

of the model is presented in figure 2:




According to Milton Friedman (2006) "There is one and only one social

responsibility of business- to use its resources and engage in activities designed to

increase its profits so long as it stays within the rules of the game, which is to say,

engages in open and free competition without deception or fraud."



                                           21
       Milton Friedman's Theory on Corporate Social Responsibility

Milton Friedman's statement that a business's social responsibility lies in making

profit has shown a controversial point of view in modern business. Some people

believe in Friedman's ideas while others do not. Is it possible that Friedman can be

both right and wrong? In business, there are different situations that require different

perspectives and methods of approach. On one hand, it is correct to say that the main

focus of a business should be to make profit. Without profit, a business can not

survive. In a way, Friedman's theory does promote social responsibility to society.

The increase of profits in a company benefits the economy which benefits the

citizens of that economy. Friedman believed that social responsibility should not be

forced by the government. While most economists agree with this notion, many

believe that he may have gone to an extreme by saying that it is the company's only

social responsibility. Companies can still maintain their successful path while

pursuing several different methods of social responsibility simultaneously.

Responsibility to stakeholders can still be achieved while helping to strengthen the

community. For example, companies can conduct research to provide a safer

product to consumers.

       Drucker (2003) differentiated between two types of social responsibilities:

those to do with social impacts or what business does to society and those to do with

social problems or what business can do for society. Social impacts go beyond the

specific contribution the company exists to make, such as providing needed products
                                           22
and services. They are often unintended but inescapable by-products of business, as

part of and serving society. Drucker advised that, once identified, social impacts are

best eliminated. The principle was clear: identify and address -- if not eliminate --

undesirable social impacts of business activities and, if they cannot be turned into

profitable business opportunities, seek a regulatory solution (industry self-regulation

or government regulation) that creates an optimal trade-off for all involved. Drucker

also viewed social problems as sources of opportunity. He suggested that business

has responsibilities in relation to social problems, but that there are also limits to

social responsibility in this regard. These limits of corporate responsibility –

Drucker suggested demands for social responsibility in response to social problems

be resisted when this would impair the performance capability of the business,

exceed its competence, and when it would Peter Drucker would impair the

performance capability of the business, exceed its competence, and when it would

usurp legitimate authority (such as that of government) or would involve illegitimate

authority.

2.3    Theoretical framework of CSR.

The two views of corporate social responsibility are: the classical view and the

socioeconomic view.

According to Robbins and Coulter (2007);

The Classical View: This view says that management‘s only social responsibility is

to maximize profit. The most outspoken advocate of this approach is economist,
                                            23
Milton Friedman (1962 and 1970). He argues that managers‘ primary responsibility

is to operate the business in the best interest of the stockholders. Friedman

commented that stockholders have single concern: Financial return. He also argues

that anytime managers decide to spend the organization resources for ―social good‖,

they are adding to the cost of doing business. These costs have to be passed on to

consumers either through higher prices or be absorbed by stockholders through a

smaller profit return as dividends.

The Socioeconomic View: Robbins and Coulter (2007) further explains that the

socioeconomic view is of the view that management‘s social responsibility goes

beyond making profit to include protecting and improving social‘s welfare of its

stakeholders and the environment that the firm carry out its operations. This position

is based on the belief that corporation are not independent entities responsible only

to stockholders. They also have the responsibility to the society that allow their

formation through various laws and regulations and support them through

purchasing their products and services. One of the major advocates of this view is

Archie Carroll (Zain, 2008)


Carroll and Friedman Agree on Basic Responsibilities: Carroll and Friedman agree

on the maximisation of firms' values as a core responsibility. They also advocate

that such responsibility remain in-line with legal standards and therefore firms are

not to engage in illegal activities.

                                         24
Carroll Looks Beyond Maximisation of Profits: Carroll takes a firm's responsibilities

further by talking about social responsibility. Under social responsibility, he outlines

ethical and discretionary responsibilities. These are affectionately known as the

"Should-Do's" and "Might-Do's" respectively (Zain, 2008).

Zain (2008) went further to explain that, Carroll foresees the importance of ethical

standards as part of a firm's success in the long-run. By following beliefs of certain

moral standards and pro-actively volunteering to search for charitable avenues, the

social responsibility dimension will create a positive rapport between the firm and

parties that are privy to its operations; this includes suppliers, clientele, employees

and the surrounding community.


2.4 Argument for and against CSR.


       According to Paula (2009), Friedman's perspectives represent the most

famous and frequently cited opposition to Corporate Social Responsibility. He went

further to say that Friedman opposition is termed the "economic" argument against

CSR, who has argued that the primary responsibility of business is to make a profit

for its owners, albeit while complying with the law. Sainthouse (2009) says that the

"competitive" argument recognizes the fact that addressing social issues comes at a

cost to business. To the extent that businesses internalize the costs of socially

responsible actions, they hurt their competitive position relative to other businesses.

Gwynne (2009) argues that those in business are ill-equipped to address social
                                          25
problems. This "capability" argument suggests that business executives and

managers are typically well trained in the ways of finance, marketing, and

operations management, but not well versed in dealing with complex societal

problems. Thus, they do not have the knowledge or skills needed to deal with social

issues. This view suggests that corporate involvement in social issues may actually

make the situation worse. Part of the capability argument also suggests that

corporations can best serve societal interests by sticking to what they do best, which

is providing quality goods and services and selling them at an affordable price to

people who desire them.


There are several arguments in favor of corporate social responsibility. One view,

held by critics of the corporate world, is that since large corporations create many

social problems, they should attempt to address and solve them. (Robbins & Colter,

2007). They went further to      suggest that corporations can do a better job of

producing quality, safe products, and in conducting their operations in an open and

honest manner.


Robbins & Colter, (2007) also says that the "self-interest" argument that suggests

corporations should conduct themselves in such a way in the present as to assure

themselves of a favorable operating environment in the future. In this theory of the

firm-based model, managers conduct a cost/benefit analysis to determine the level of

resources to devote to CSR activities/attributes. Simply put, firms simultaneously
                                         26
assess the demand for CSR and the cost of satisfying this demand and then

determine the optimal level of CSR to provide.


Robbins & Colter (2007) explained that some suggested that businesses should

assume social responsibilities because they are among the few private entities that

have the resources to do so. The corporate world has some of the brightest minds in

the world, and it possesses tremendous financial resources.


Argument For and Against CSR (Figure 3.0)

   FOR                                           AGAINST
1 The rise of the modern corporation Taking on social and moral issues is not
   created and continues to create many economically feasible. Corporations should
   social    problems.      Therefore,    the focus on earning a profit for their shareholders
   corporate     world      should    assume and      leave    social   issues   to    others.
   responsibility for addressing these (Friedman,1970)
   problems. (Carroll, 1991)
2 In the long run, it is in corporations' Assuming social responsibilities places those
   best     interest   to   assume     social corporations doing so at a competitive
   responsibilities. It will increase the disadvantage relative to those who do not.
   chances that they will have a future (Robbins & Coulter 2007)
   and reduce the chances of increased
   governmental        regulation.    (Ajala,
   2009)
3 Large       corporations     have      huge Those who are most capable should address
   reserves of human and financial social issues. Those in the corporate world are

                                                27
   capital. They should devote at least not equipped to deal with social problems.
   some of their resources to addressing (Gwynne, 2009)
   social issues. (Ajala, 2009)

2.5 The concept of CSR in the Nigerian Banking Sector


       The continual interactions of the banks with their environment and the

exchanges between them confer some sort of responsibilities on their business

dealing with the society, and vice versa. The stakeholders‘ (social contract) theory

maintains that companies have social responsibility to all stakeholders for allowing

their existence, based on social contract (O‘Brien, 1996). This requires companies to

improve on the economic satisfaction of consumers and employees without

impairing the environment, depleting natural resources, nor subjecting their

employees to dehumanizing working conditions. Such vices systematically worsen

the position of some stakeholders. CSR demands arise out of the social impacts of

business organizations, and because of society itself in terms of the erosion of

ethical values (Osaze, 1983). Broadly defined, CSR is an organization‘s

commitment to operate in an economically and environmentally sustainable manner

while recognizing the interests of all its stakeholders (Carrol, 1991). It has been

shown that the success of CSR in any organization is dependent on its corporate

social orientation and values, and largely, on its ethical orientation (Logsdon and

Yuthas, 1997).


                                         28
In spite of the centrality of CSR to the corporate survival, the controversy of how

much resources a corporate organization should commit to social causes tends to

deepen. In practice, however, social responsibility marginally contributing to profits

is more readily met than those not contributing to it (Umoh, 1983). Therefore, social

responsibility is a by-product of profitability. Researchers have demonstrated that

firms that anchor their performance on CSR are the most profitable over time

(Harrison and Freeman, 1999; Barrett, 1998). Thus, CSR is about the organization

striving towards profit maximization while still obeying the laws, being ethical, and

being a socially responsible and responsive corporate citizen. However, profitability

is not the only benefit associated with CSR. According to Hodgson (2005), other

critical benefits of concerted commitment to CSR include a strong reputation and

improved corporation brand recognition; being exemplified as responsible by

stakeholders; sustainable product brand loyalty; and improved government and

community relations.


       CSR is generic to all organizations. Relatively, however, banking

organizations seem to be the most sensitive to the impact of CSR. This is because an

outstanding feature of the banking industry is that it is subject to a more diverse and

complex publics than most other sectors of the economy.


       A bank has a corporate social obligation to satisfy all these complex publics;

a bank undertakes to maximize profit for shareholders who contributed funds to set
                                          29
it up. It must maintain optimal liquidity to meet depositors demand. It is obliged to

satisfy the legitimate deficit sector demand for credits. The bank must comply with

regulators‘ requirements to continue in business. Above all, for the bank to be seen

as a good corporate citizen, it has to contribute to the maximum development of the

economy as well as satisfy its immediate community (Nwankwo, 1991, p. 26). With

globalization, the structure of the banking public may be far more complex than can

be readily envisaged. Moreover, the dynamism of modern society continues to

change the composition and intricacies of CSR requirements of the banking

industry. The complexities and indispensability of these interrelationships have

made CSR and corporate existence of banks inseparable. The banking sector is the

pivot of socio-economic development of any economy. Banks need to be socially

responsible to be able to build their ―reputational capital which enables them to

attract high-quality employees, enable them to charge higher fees, negotiate better

deals, expand customer base, attract more investors and win public trust.


2.6     Theories of value orientation of CSR

2.6.1 Theory of maximized profits for shareholders:

      The conventional theory of CSR believes that companies, as a business setup,

should take optimal profit making for shareholders as their most fundamental

objective. The realization of the benefits of any other concerned interest parties who

are under the influence of the company‘s behaviors should not be deemed as the

                                         30
corporate objective. And the management body of the company shall have the right

to resort to any means to achieve the goal when making any decisions or taking any

actions on behalf of the company.

2.6.2 Theory of social responsibility for protection on the interests of the corporate

stakeholders other than shareholders:

    This school of theory maintains that maximizing the interests of the

shareholders of the company is the most important objective that a business

organization should achieve. However, it should not be considered as the sole

objective. As a business organization, a company is vitally interrelated with the

overall social environment. When in business activities, a company should not only

consider on the influence that the activities may have on shareholders, but also on

the influence that they will have on the interests of the parties other than the

shareholders, including employees, suppliers, customers, creditors and on the

benefits of the government. When a company makes any decision, it has to take into

account the benefits of these people. Otherwise, it should take liabilities against any

harm or damages thus incurred to these people.

2.6.3 Theory of social responsibility on being good citizens:

       This theory maintains that companies, as business organizations, should take

profit making as the corporate objectives. However, companies are also liable to

offering help, i.e. companies shall have the obligation to help solve certain social

problems. For instance, companies shall have the obligation of making donations to
                                          31
education or charity organizations.

2.6.4 Theory of social responsibility on minimum requirement of morality:

       This CSR theory believes that companies have the obligation to satisfying

shareholders‘ interests rather than causing damages to other parties. By this theory,

as long as companies have avoided causing or corrected the social harm caused due

to their behavior during the process of business activities, the companies are deemed

to have fulfilled their social responsibilities. The CSR theory of minimum

requirement of morality is regarded by some scholars as conservative idealism, or in

other words as the voluntary compliance with the law.

2.7 Issues in CSR of the Nigerian Banks

       Nigerian Banks have not only been playing the financial intermediation role,

but have been aiding the socio-economic, political and other critical developmental

aspects of the country over the years (Ademuso, 2008). Whether in the quantum of

taxes and levies paid employment, economic empowerment, health services, sports

and recreation, arts and culture, community and human development, among other

endeavors, banks in Nigeria have continued to add value. Indeed, their CSR efforts

have produced multiplier effects on all other sectors.

Today, most Banks in Nigeria have specialized departments that address CSR

issues. This is a confirmation of the importance attached to the concept by the

Banks. Given the role of CSR in enhancing the reputation of a business

organization, Banks in Nigeria have realized the imperative of adopting CSR as a
                                          32
cornerstone of their business strategy (Amechi, 2006). In response to a more

competitive operating environment, First Bank embarked on a corporate

transformation project focused on driving key, cross-functional initiatives required

to deliver on the Bank's aspirations. The central element of this is the pursuit of

growth, to be achieved among other means by taking advantage of the "integration

engine" to ensure the capture of expected value from the Bank's inorganic growth

strategy. We have also commenced a standardisation process to increase our

efficiency, speed, accuracy and optimise our overall cost structure. Ultimately, this

requires that we achieve two clear objectives: create superior customer experience

while re-focusing branch staff from processing to sales; and significantly improve

our cost position by optimising distribution costs and improving customer

convenience through enhanced service options.

2.8 Corporate Social Responsibility in First Bank of Nigeria Plc.

                     (FBN Plc 2009 annual report)

       Long before such activities became popularly known as Corporate Social

Responsibility (CSR) and long before it became essential for companies to engage

in CSR as part of their brand building agenda, First Bank of Nigeria Plc have been

making regular, substantial contributions to the wellbeing of grassroots communities

and Nigerians.

First Bank's CSR strategy reflects their commitment to being socially, economically,

and culturally responsible. With a resolve to provide sustainable solutions to the
                                         33
diverse developmental challenges that Nigerians encounter on various fronts, the

Bank pursues constructive engagements and mutual partnerships with the recipient

stakeholders, through a user-defined needs identification system.

First Bank's CSR is accentuated by sustained aspiration to lead the industry by

example not just in the provision of the best products, services and developmental

assistance for promoting the individual and common good, but also in maintaining

the highest standards of corporate governance, accountability and responsiveness to

their internal and external stakeholders.

FBN Plc‘s CSR initiatives, have provide targeted support for education and youth

development, grassroots sports development, healthcare, arts and culture,

entrepreneurial and economic development, as well as sustainability of the

environment. FBN Plc 2009 annual report showed that one billion, two hundred and

twenty-nine million, five hundred and thirteen thousand, nine hundred and eighty

eight Naira (N1,229,530,980) was spent on CSR.

2.9 Rational view of Corporate Social Responsibility.

       CSR is an important business strategy because, wherever possible,

consumers want to buy products from companies they trust; suppliers want to form

business partnerships with companies they can rely on; employees want to work for

companies they respect; and NGOs, increasingly, want to work together with

companies seeking feasible solutions and innovations in areas of common concern.

Satisfying each of these stakeholder groups allows companies to maximize their
                                            34
commitment to another important stakeholder group—their investors, who benefit

most when the needs of these other stakeholder groups are being met (Akinloye,

2009)

The businesses most likely to succeed in the globalized world will be those best able

to combine the often conflicting interests of its multiple stakeholders, and

incorporate a wider spectrum of opinions and values within the decision-making

process and objectives of the organization. Lifestyle brand firms, in particular, need

to live the ideals they convey to their consumers: The 21st century will be the

century of the social sector organization. The more economy, money, and

information become global, the more community will matter, Drucker (2003)

2.10 CSR and the stakeholders of a bank.

     Stakeholders are persons or companies that are involved in a particular

organization, project, and system and so on, especially because of the money they

have invested in it. (Oxford advanced learners‘ dictionary, 7th edition).

The stakeholders of the bank are mainly divided into two:

2.10.1 The primary stakeholders: (Shareholders, Employees, Customers, and

others)

        The owners of a firm are among the primary stakeholders of the firm.

According to Afolabi (2009), an organization has legal and moral obligations to its

owners, these obligations include, but are not limited to, attempting to ensure that

owners receive an adequate return on their investment. Employees are also primary
                                          35
stakeholders who have both legal and moral claims on the organization.

Organizations also have specific responsibilities to their customers in terms of

producing and marketing goods and services that offer functionality, safety, and

value; to local communities, which can be greatly affected by the actions of resident

organizations and thus have a direct stake in their operations; and to the other

companies with whom they do business. Many social commentators also suggest

that companies have a direct responsibility to future generations and to the natural

environment.

2.10.2 The secondary stakeholders: (the Government, Regulatory bodies, Trade

union and others)

       According to Robbins & Coulter (2007), organizations are accountable to its

secondary stakeholders as listed above. Organizations must also contend with civic

and special interest groups that purport to act on behalf of a wide variety of

constituencies. Wiedmann (2006) also explained that trade associations and industry

groups are also affected by an organization's actions and its reputation. The media

reports on and investigates the actions of many companies, particularly large

organizations, and most companies accept that they must contend with and

effectively "manage" their relationship with the media. Finally, even an

organization's competitors can be considered secondary stakeholders, as they are

obviously affected by organizational actions. For example, one might argue that

organizations have a social responsibility to compete in the marketplace in a manner
                                         36
that is consistent with the law and with the best practices of their industry, so that all

competitors will have a fair chance to succeed.

2.11   The Impact of Corporate Social Responsibility.

       CSR is a required investment to create sustainable development for the

business, because it offers the companies (banks) an opportunity to bridge the ―trust

gap‖ among different stakeholders such as, government, customers, employees,

suppliers, investors, and others. Some of the impact of CSR includes:

       To the company:

Ajala (2005) says: ―CSR programmes offer opportunity to build goodwill, affect

corporate image and reputation as a result of company‘s contribution to the welfare

of the community, either local or international‖. She added that CSR enhances

growth of investors‘ confidence in the company‘s shares.

A firm that consistently fulfill its social obligations makes itself a welcomed

member of the community and this may attract customer both home and aboard.


According to Kesaprakorn (2009) the impact of Corporate Social Responsibility on

the business environment and government include,

   To the environment:

    Greater material recyclability.

    Better product durability and functionality.

    Greater use of renewable resource.

                                           37
    Integration of environment management tools into business plans.

To the Community and General public:

    Charitable contribution.

    Employee volunteer programs.

    Corporate involvement in community education.

    Corporate involvement in community education and homelessness program.

    Product safety and quality.

2.12   Challenges of CSR in the Nigerian Banking sector.

    Business organizations are products of their socio-economic environment,

       which in turn shapes or influences their activities. The Banking terrain in

       Nigeria is one of the most sophisticated, yet challenging in terms of structure

       and component. (Amaeshi et al, 2006)

    The level of public confidence in the banks is not such that can guarantee

       effective customer patronage of internet banking services. With the

       deficiencies in the existing electronic banking guidelines and the seemingly

       lack of proactive measures in banking regulations in the country, the success

       of internet banking remains uncertain. This is a serious impediment to the

       development of the banking system because in the modern banking system,

       internet banking is not an alternative. It is an urgent necessity. This

       underscores the fact that an effective regulation is of paramount importance


                                         38
        to the development of internet banking process in the country before it

        becomes the basis of future bank distress (CBN 2006)

      According to Nwankwo G, 1990, as a service delivery sector, custodian of

        the people‘s wealth and dealer in the ―real thing‖ (money), which everybody

        needs there are a lot of expectations from a myriad of stakeholders;


According to Ademosu (2008) Some of the key challenges are,

 –    Paucity of funds to embark on massive CSR projects;


 –    These rising population places additional responsibility on Banks to assist in

      the provision of more infrastructure and other forms of support to complement

      that of the Government;


 –    The increasing role of the private sector (all the Banks in Nigeria are private

      enterprises) to play a more frontal role in national growth and development;


 –    Social and human pressure. These have induced contending demand and

      requests on Banks in the face of financial constraints. Today, the outlook of

      Nigerian Banks is no more measured by, ―local standards‖, but by

      international standards. Often, the inability of Banks to satisfy these demands

      have resulted in disappointments and eventually to, ―bank bashing‖;


 –    Inadequate information to the public on the modalities and essence of CSR as

      well as the achievements of Banks in this regard. Many believe that Banks are
                                          39
       not doing enough to improve the welfare of the public in view of the

       supposedly ―jumbo profits‖ they make;


 –     Inability of Banks to co-ordinate efforts and collaborate to execute CSR

       projects, particularly the capital intensive ones, such as road construction.


2.13    Emerging Trends.

        CSR_guide (2009) explains the emerging trends in CSR. Its explain CSR as a

strategy which is becoming increasingly important for businesses today because of

two identifiable trends:

• Changing social expectations: Consumers and society in general expect more from

the companies whose products they buy or services they receive. This sense has

increased in the light of recent corporate scandals, which reduced public trust of

corporations, and reduced public confidence in the ability of regulatory bodies and

organizations to control corporate excess.

• Globalization: The growing influence of the media sees any ‗mistakes‘ by

companies brought immediately to the attention of the public. In addition, the

Internet fuels communication among like-minded groups and consumers

empowering them to spread their message, while giving them the means to co-

ordinate collective action (i.e. a product boycott).

        These two trends combine with the growing importance of brands and brand

value to corporate success (particularly lifestyle brands) to produce a shift in the

                                            40
relationship between corporation and consumer, in particular, and between

corporation and all stakeholder groups, in general. The result of this mix is that

consumers today are better informed and feel more empowered to put their beliefs

into action. From the corporate point of view, the market parameters within which

companies must operate are increasingly being shaped by bottom-up, grassroots

campaigns. NGOs and consumer activists are feeding, and often driving, this

changing relationship between consumer and company.




                                       41
                             CHAPTER 3

                             RESEARCH METHODOLOGY

3.0    INTRODUCTION

According to Oni (2003), research methodology is used to describe all the methods

involved in the collection of all information required for a study. This chapter is

divided into two sections, the section contains an appraisal of First Bank of Nigeria

PLC and the second section contains restatement of the research questions and

hypotheses, research design, population and sampling size, research instrument,

validity and reliability of data, measurement of variable, data analysis technique,

limitations of the research methodology of the study.

3.1    Appraisal of First Bank of Nigeria PLC

First Bank of Nigeria PLC is used as the case study in order to generate an accurate

inference for the study. FirstBank has international presence through its subsidiary

FBN Bank (UK) in London and Paris and its offices in Johannesburg and Beijing.

First Bank Of Nigeria PLC (―First Bank‖ or ―the bank‖) is one of the oldest

financial institutions in Nigeria and was the first bank to be established in West

Africa. The bank was incorporated as a limited liability company in March 1894 and

commenced operations the same year as the Bank for British West Africa (BBWA).

Subsequent restructuring initiatives saw the bank‘s name changed to Bank of West

Africa (1957), Standard Bank of Nigeria Limited (1969), First Bank of Nigeria

Limited (1979) and First Bank of Nigeria Plc (1991). The bank was listed on The
                                          42
Nigerian Stock Exchange in March 1971 and has an unlisted Global Depository

Receipt (GDR) programme.

With about 1.3 million shareholders across several countries, The Bank provides a

comprehensive range of retail and corporate solutions and through its subsidiaries

contributes to national economic development – in capital market operations,

insurance brokerage, bureau de change, private equity/venture capital, pension funds

management, registrarship, trusteeship, mortgages and microfinance. Drawing from

experience that spans 115 years of dependable service, the Bank has continued to

strengthen its relationships with customers, consolidating alliances with key sectors

that have been strategic to the well-being and growth of Nigeria ; with a clear and

defined strategy to ensure strong growth in profitability and has 2nd largest

distribution network, unarguably the country's most diversified financial services

group, serves more than 4.2 million customers through 396 branch offices in

Nigeria.

As a market leader, First Bank was appointed by the Debt Management Office

(DMO) as one of the primary dealers in Federal Government Bonds. The primary

dealers include 10 banks and 5 discount houses. First Bank is also one of the 10

banks approved as settlement banks by CBN. In addition, the bank is a leading

member of the ATM Consortium, an off-site independent Automated Teller

Machine service provider as well as a member of Inters witch Limited, an electronic

transaction switching and payment processing company. First Bank is also a major
                                          43
player in Western Union Money Transfer Services. The bank has 350 online retail

outlets (the largest in the country) and its operations are supported by a robust

banking software application, called ―Finacle‖.

Operationally, First Bank has two strategic business units (SBU‘s), namely:

Corporate Banking and Retail Banking.

Subsidiaries:

First Bank (UK) Limited, FBN Insurance Brokers Nigeria Limited, FBN Mortgages

Limited, First Funds Limited (FBN Capital Limited First Registrars Nigeria

Limited, First Pension Custodian Nigeria Limited, First Trustees Nigeria Limited

(FTNL).

       Mission Statement of First bank:

“Remain true to our name by providing the best financial service possible”

       Vision Statement of First bank:

“Be the clear leader and Nigeria’s Bank of first choice”

3.2    RESTATEMENT OF RESEARCH HYPOTHESES

3.2.1 STATEMENT OF HYPOTHESES

H0:    Corporate Social Responsibility has no significant impact on the profitability

       of First Bank of Nigeria Plc

H1:    Corporate Social Responsibility has a significant impact on the profitability

       of First Bank of Nigeria Plc.


                                          44
3.2.2 RESEARCH QUESTIONS

   The following questions would be examined during the course of this study:

    Does First Bank of Nigeria PLC embark on Corporate Social Responsibility?

    What impact does Corporate Social Responsibility have on the bank‘s

       profitability?

    What challenges if any does Corporate Social Responsibility impose on the

       bank?

    Does Corporate Social Responsibility guarantee the customers‘ confidence

       level and security of depositor‘s fund?


3.2.3 RESEARCH DESIGN

       According to Asika (1991), research design is the structuring of investigation

aimed at identifying variables and their relationship to one another. This is used for

the purpose of obtaining data to enable the researcher test hypothesis or answer

research questions. It is an outline or scheme that serves as a guide to the researcher

in his effort to generate data for his study. In this study, the research design used is

the survey design. A survey research design is one in which the sample subject and

variables that are being studied are simply being observed as they are without any

attempt to control or manipulate them (Ojo 2003). The survey research design is

aimed at discovering the inter-relationship between variables. Questionnaires is to

be use as the instrument of gathering information from knowledgeable respondents

                                          45
and also going beyond the observation of the correlation between independent and

dependent variables.

3.2.4   POPULATION AND SAMPLE SIZE

        The study population is very large, so 50 respondents shall be selected from

the top level management, middle level management and the supervisors which

should be a good representation of the population based on stratified sampling. This

cuts across the various departments in the bank such as corporate affair department,

customer services department, retail department, marketing department and others.

Also 50 respondents shall be selected from the customers based on random

sampling.

3.2.5 RESEARCH INSTRUMENT

        The instrument to be used for the collection of data for the purpose of this

study would be questionnaires. The questionnaires contain relevant questions for the

purpose of this study. The data that was obtained from completed questionnaires to

analyzed and used to test the hypothesis.

3.2.6 VALIDITY OF THE RESEARCH INSTRUMENT

To ensure that the study instrument is valid and reliable, as the quality of a research

largely depends on the quality of the instruments used and procedures of collecting

the data since the two essentials of a good research are validity and reliability, the

researcher ensured that the questions designed are based on the following

guidelines:
                                            46
 The questions were formed in such a way as to make it easy for respondents to

   understand them

 The questions asked were as few in number as necessary to produce the

   information required..

 The questions required answers that were very straight forward and precise in

   nature.

 The questions are directly related to the information required.

 The questions were such that could be answered honestly and without bias.

Since validity is the extent to which the instrument used measures what it was

intended to measure, the accuracy of a research instrument being reliable is whether

the data collection process is consistent and stable.

3.2.7 MEASUREMENT OF VARIABLE

A variable is a phenomenon or events that can be measured or manipulated in a

study. Two variables exist in research; there are independent and dependent

variables. Independent variable represents the level of factors and is used to group

observations into different treatment group. In case of this study, the Independent

Variable is Corporate Social Responsibility while the Dependent Variable is

Profitability.




                                           47
3.3     DATA ANALYSIS TECHNIQUE

The statistical techniques employed in analyzing data collected in this study are:

       TABLE

Tables effectively order and summarize the quantitative data. They are used to

arrange facts and figures in columns and rows. These facts and figures can be

systematically examined. (Ojo, 2005)

       PERCENTAGES

These are used in translating frequency counts into percentage. These percentages

        were used to show the distribution of respondents according to their

        responses. (Ojo, 2005)

       CORRELATIONAL ANALYSIS

The Pearson product-moment correlation coefficient (sometimes referred to as the

PMCC, and typically denoted by r) is a measure of the correlation (linear

dependence) between two variables X and Y, giving a value between +1 and −1

inclusive. It is use as a measure of the strength of linear dependence between two

variables. According to Ojo (2005) PMCC is used to find out if there is any

relationship between two variables. While doing this, a variable is regressed to

another variable. When increase in variable X leads to an increase in variable Y; we

say there is a positive correlation. If vice versa it is negative. (Ojo, 2005)

        Product moment correlation coefficient (r) is given as;


                                            48
Where:            r = Pearson‘s Product Moment correlation.

       ∑n= Number of pairs of values

       X = Independent variable (CSR)

       X = Mean of independent variable (CSR)

         Y = Dependent variable (Profitability)

       Y = Mean of dependent variable (Profitability).


Interpretation:


       The correlation coefficient ranges from −1 to 1. A value of 1 implies that a

linear equation describes the relationship between X and Y perfectly, with all factors

affecting Y held constant for which Y increases as X increases. A value of −1

implies Y decreases as X increases. A value of 0 implies that there is no linear

correlation between the variables.

Decision Rule:

       If calculated r (rc) > tabled r (rt) - Reject H0 and Accept H1

       If calculated r (rc) < tabled r (rt) - Accept H0 and Reject H1

Where;            H0 is the Null Hypothesis

                  H1 is the Alternate Hypothesis (Asika 2009)

                                              49
                                 CHAPTER FOUR

       DATA PRESENTATION, ANALYSIS AND INTERPRETATION

4.0 INTRODUCTION

This chapter deals with presentation, analysis and interpretation of the data collected

from the field by means of questionnaire as well as those collected from secondary

sources (annual report) to show the impact of corporate social responsibility of the

profitability on the Nigerian banking sector. The responses from the questionnaire

were analyzed through the use of tables and percentages. The Pearson Product

Moment Correlation Coefficient was made use of in testing the hypothesis

formulated.

Fifty (50) questionnaires were distributed to staff of First Bank out of which forty-

six (46) were completed and retrieved, while fifty (50) questionnaires were

distributed to the external stakeholders of the bank such as customers and members

of the host community out of which forty-three (43) were returned and used for data

Analysis.

4.1 DATA PRESENTATION AND ANALYSIS

       4.1.1 QUESTIONNAIRE TO STAFF:

The table shows the suggested answer and the numbers of respondents with the

percentage of the respondent to each.

DESCRIPTIVE STATISTICS:


                                          50
Section A

Table 4.1.1.1: Sex Distribution of Respondents

          SEX                     FREQUENCY PERCENTAGE

          MALE                    12                 26%

          FEMALE                  34                 74%

          TOTAL                   46                 100%

SOURCE-Field survey 2010

The table 4.1.1.1 reveals that 12 (26%) of the respondents are male while 34 (74%)

are females, indicating that the organization has a fairly favorable policy towards the

employment of women.

Table 4.1.1.2: Marital Status of Respondents

          MARITAL STATUS               FREQUENCY            PERCENTAGE

          SINGLE                       16                   35%

          MARRIED                      21                   46%

          DIVORCED                     6                    13%

          WIDOWED                      3                    7%

          TOTAL                        46                   100%

SOURCE- Field survey 2010

The table 4.1.1.2 reveals that 16 (35%) are single, 21 (46%) are married, 6 (13%)

are divorced and 3 (7%) are widowed out of the respondents.


                                            51
Table 4.1.1.3: Age Distribution of Respondents

         AGE BRACKET               FREQUENCY           PERCENTAGE

         16-25                     3                   7%

         26-35                     16                  34%

         36-45                     17                  37%

         45 and above              10                  22%

         TOTAL                     46                  100%

SOURCE- Field work 2010

The table 4.1.1.3 reveals that 3(7%) of the respondent are within the ages of 15-25,

16(34%) are within the ages of 26-35, 17(37%) are within the ages of 36-45 and 10

(22%) are within the ages of 45 and above..



Table 4.1.1.4: Respondents’ Job Levels

         STATUS/POSITION           FREQUENCY           PERCENTAGE

         Low level manager         9                   20%

         Middle level manager      26                  55%

         Top level manager         11                  24%

         TOTAL                     46                  100%

SOURCE- Field work 2010


                                        52
The table 4.1.1.4 reveals that 9 (20%) of the respondents are low level managers, 26

(55%) are middle level managers and 11 (24%) are Top level managers.

Table 4.1.1.5: Work Experience Distribution of Respondents

         LENGTH OF TIME                FREQUENCY            PERCENTAGE

         Less than a decade            19                   41%

         A decade and more             27                   58%

         TOTAL                         46                   100%

SOURCE- Field survey 2010

The table 4.1.1.5 reveals that 19 (41%) respondents have less than a decade work

experience while 27 (58%) have a decade and more work experience with the bank.

The implies that information obtained from the questionnaire were from staff who

have gained sufficient experiences from the bank, making the information reliable



Table 4.1.1.6: Education Qualification Distribution of Respondents

         QUALIFICATIO N            FREQUENCY           PERCENTAGE

         SSCE                      0                   0%

         HND                       5                   11%

         B.sc                      19                  41%

         BA                        8                   17%

         MBA/M.sc                  9                   20%


                                            53
          Others                     5                  11%

          TOTAL                      46                 100%

SOURCE: Field survey

This table 4.1.1.6 shows that 5% of the respondent have SSCE, 19% of the

respondent have HND, 8% of the respondents have B.Sc, 9% of the respondent have

MBA/M.sc and 5% have other qualification.



Table 4.1.1.7: Professional Qualification Distribution of Respondents

          QUALIFICATION              FREQUENCY          PERCENTAGE

          ACA                        18                 39%

          AATWA                      6                  13%

          ACCA                       8                  17%

          CIBN                       3                  7%

          Others                     11                 24%

          TOTAL                      46                 100%

SOURCE- Field survey 2010

The table 4.1.1.7 reveals that 18 (39%) of the respondents have ACA, 6 (13%) have

AATWA, 8(17%) have ACCA, 3(7%) have CIBN and 11 (24%) of the respondents

possess other professional qualifications not listed.




                                           54
Section B

4.1.2 PRESENTATION AND ANALYSIS OF RESEARCH QUESTIONS

8. What do you think about your bank embarking on CSR?

Table 4.1.2.1: Respondents awareness on FBN Plc embarking on CSR

       RESPONSES           FREQUENCY PERCENTAGE

       NECESSARY           15                   33%

       COMPLUSORY 10                            22%

       VOLUNTARY           8                    17%

       BENEFICIAL          13                   28%

       TOTAL               46                   100%

SOURCE-Field survey 2010

The table 4.1.2.1 shows that 33% of the respondents feel that First Bank of Nigeria

PLC embarking on CSR is necessary, 22% feel it is compulsory, 17% feel it is

voluntary and 28% felt it is beneficial.




                                           55
9. What impact has the project / programme had on the community?

Table 4.1.2.2: Respondent responds to impact of the CSR projects/programme

on the community

        RESPONSES         FREQUENCY             PERCENTAGE

        Positive          40                    87%

        Negative          0                     0%

        Neutral           6                     13%

        TOTAL             46                    100%

SOURCE-Field survey 2010

The table 4.1.2.2 above reveals that a high proportion (87%) of the respondents felt

the impact of CSR is positive, none of the respondents felt it is negative and 13%

felt it is neutral.



10. Are there other benefits FBN stands to gain aside profitability from the

execution of CSR projects?




                                        56
Table 4.1.2.3: Respondent responds about other benefits FBN stands to gain

apart from profitability

       RESPONSES                    FREQUENCY            PERCENTAGE

       Large Customer Base          23                   50%

       Customer Confidence          12                   26%

       Good corporate Image         8                    17%

       Other Benefits               3                    7%

       TOTAL                        46                   100%

SOURCE- Field survey 2010

From the table 4.1.2.3 above, 50% of the respondent believes FBN also benefit

Large Customer Base, 26% believes it will have Customer Confidence, 17%

believes Good Corporate Image and only 7% believes other benefit could be gained

from the execution of CSR projects apart from Profitability.

SECTION C:

11. Profit is increased by the activity of corporate social responsibility of the

company?




                                         57
Table 4.1.2.4: Respondent response to question 11

        RESPONDENT                      FREQUENCY            PERCENTAGE

        STRONGLY AGREE                  10                   22%

        AGREE                           25                   54%

        UNDECIDED                       9                    20%

        DISAGREE                        2                    4%

        STRONGLY DISAGREE               0                    0%

        TOTAL                           46                   100%

SOURCE- Field survey 2010

The table 4.1.2.4 above shows that 22% of the respondent strongly agreed, 54% of

the respondent agreed, 20% of the respondent were undecided, 4% of the

respondents disagreed while 0% of the respondent strongly disagreed that Profit is

increased by the activity of corporate social responsibility of the company. Though I

couldn‘t gain access to the branch records but the bank result shows increase in

profitability.

12. Profit is decreased by the activity of corporate social responsibility of the

company?




                                         58
Table 4.1.2.5: Respondent response to question 12

       RESPONDENT                        FREQUENCY           PERCENTAGE

       STRONGLY AGREE                    0                   0%

       AGREE                             4                   9%

       UNDECIDED                         10                  22%

       DISAGREE                          20                  44%

       STRONGLY DISAGREE                 2                   4%

       TOTAL                             46                  100%

SOURCE- Field survey 2010

The table 4.1.2.5 above shows that 0% of the respondent strongly agreed, 9% of the

respondent agreed, 22% of the respondent were undecided, 44% of the respondents

disagreed while 4% of the respondent strongly disagreed that Profit is decreased by

the activity of corporate social responsibility of the company.



13. Corporate Social Responsibility has no significant impact on the profitability of

the bank ?




                                          59
Table 4.1.2.6 Respondent response to question 13

    RESPONDENT                       FREQUENCY           PERCENTAGE

    STRONGLY AGREE                   0                   0%

    AGREE                            1                   2%

    UNDECIDED                        3                   7%

    DISAGREE                         25                  54%

    STRONGLY DISAGREE                17                  37%

    TOTAL                            46                  100%

SOURCE-Field survey 2010

The table 4.1.2.6 shows that 0% of the respondent strongly agreed, 2% of the

respondent agreed, 7% of the respondent were undecided, 54% of the respondents

disagreed while 37% of the respondent strongly disagreed that Corporate Social

Responsibility has no significant impact on the profitability of the bank. This means

that majority believe that CSR has a significant impact on the profitability of the

bank

14. Corporate Social Responsibility has a significant impact on the profitability of

the bank?




                                          60
Table 4.1.2.7: Respondent response to question 14

             RESPONDENT                         FREQUENCY       PERCENTAGE

             STRONGLY AGREE                     18              39%

             AGREE                              26              57%

             UNDECIDED                          2               4%

             DISAGREE                           0               0%

             STRONGLY DISAGREE                  0               0%

             TOTAL                              46              100%

SOURCE- Field survey 2010

The table 4.1.2.7 of the responses above shows that 18% of the respondents strongly

agreed, 26% agreed, 2% of the respondent were undecided, 0% of the respondents

disagreed while 0% of the respondent strongly disagreed that Corporate Social

Responsibility has a significant impact on the profitability of the bank. This

confirms question 13. Majority of the staff are of the option that CSR has a

significant impact on the profitability of the bank.

15. Corporate Social Responsibility guarantees the customers‘ confidence level and

security of depositor‘s fund?




                                           61
Table 4.1.2.8: Respondent response to question 15

            RESPONDENT                       FREQUENCY         PERCENTAGE

            STRONGLY AGREE                   25                54%

            AGREE                            14                31%

            UNDECIDED                        5                 11%

            DISAGREE                         2                 4%

            STRONGLY DISAGREE                0                 0%

            TOTAL                            46                100%

SOURCE- Field survey 2010

The table 4.1.2.8 of the responses above shows that 54% of the respondents strongly

agreed, 31% agreed, 11% of the respondent were undecided, 4% of the respondents

disagreed while 0% of the respondent strongly disagreed that Corporate Social

Responsibility guarantees the customers‘ confidence and security of depositors‘

fund.

4.2 QUESTIONNAIRE TO EXTERNAL STAKEHOLDERS

The table shows the suggested answer and the numbers of respondents with the

percentage of the respondent to each.

DESCRIPTIVE STATISTICS:




                                        62
Table 4.2.1.1 Sex Distribution of Respondents

       SEX                   FREQUENCY PERCENTAGE

       MALE                  25                 58%

       FEMALE                18                 42%

       TOTAL                 43                 100%

SOURCE- Field survey 2010

The table 4.2.1.1 reveals that 25 (58%) of the respondent are male while other

18(42%) are females.

Table 4.2.1.2 Marital Status Distribution of Respondents

       MARITAL STATUS              FREQUENCY            PERCENTAGE

       SINGLE                      18                   42%

       MARRIED                     21                   49%

       DIVORCED                    1                    2%

       WIDOWED                     3                    7%

       TOTAL                       43                   100%

SOURCE- Field survey 2010

The table 4.2.1.2 reveals that 18(42%) are single, 21 (49%) are married, 1 (2%) is

divorced and 3 (7%) are widowed of the respondents.




                                        63
Table 4.2.1.3 Age Distribution of Respondents

      AGE BRACKET               FREQUENCY           PERCENTAGE

      16-25                     4                   9%

      26-35                     21                  49%

      36-45                     15                  35%

      45 and above              3                   7%

      TOTAL                     43                  100%

SOURCE- Field work 2010

The table reveals that 4 (9%) of the respondent are within the ages of 15-25, 21

(49%) are within the ages of 26-35, 15 (35%) are within the ages of 36-45 and 3

(7%) are within the ages of 45 and above.

Table 4.2.1.4: Banking Relationship

LENGTH OF RELATIONSHIP                  FREQUENCY          PERCENTAGE

LESS THAN A DECADE                      21                 49%

MORE THAN A DECADE                      22                 51%

TOTAL                                   43                 100%

SOURCE- Field work 2010

The table reveals that 21 (49%) of the respondents have less than a decade banking

relationship with the bank, while 51% have more than a decade banking relationship

with the bank


                                        64
Table 4.2.1.5 Level Of Transactions with the bank

LEVEL OF TRANSACTION:                     FREQUENCY            PERCENTAGE

HIGH                                      31                   72%

MEDIUM                                    8                    19%

LOW                                       4                    9%

TOTAL                                     43                   100%

SOURCE- Field survey 2010

The table 4.2.1.5 reveals that more respondents (72%) have high transaction level

with the bank. This means that majority of the customers have confidence in the

bank compare to 19% and 9% for Medium and low transaction level respectively.

The higher the levels of transactions customers have with the bank the better for the

bank, in terms of profitability.

4.2.2 PRESENTATION AND ANALYSIS OF RESEARCH QUESTIONS

6. Which other banks do you operate account with aside First Bank?




                                         65
Table 4.2.1.1: Respondents response to question 6

RESPONSES                              FREQUENCY       PERCENTAGE

ZENITH BANK                            4               9%

OCEANIC BANK                           7               16%

INTERCONTINENTAL BANK                  9               21%

GUARANTY TRUST BANK                    18              42%

OTHER BANKS                            5               11%

TOTAL                                  43              100%

SOURCE-Field survey 2010

The table 4.2.1.1 shows that 9% of the respondents operate accounts with Zenith

Bank,16% with Oceanic Bank, 21% with intercontinental Bank,42% with Guaranty

Trust Bank and other Banks has 11%.

7. Are you aware that First Bank embarks on any project / programme that is

beneficial to the people in your community?

Table 4.2.1.2: Respondents response to question 7

          RESPONSES           FREQUENCY PERCENTAGE
          YES                 28                65%
          NO                  10                23%
          UNDECIDED           5                 12%
          TOTAL               43                100%
SOURCE-Field survey 2010


                                        66
The table above reveals that a 28 (65%) of the respondents agreed that the bank has

embarked on programme which is beneficial to them, while 10 (23%) of the

respondent believe otherwise and 5(12%) are undecided.

8. What impact has the projects / programme had on the community?

Table 4.2.1.3: Respondent responds to Question 8

        RESPONSES         FREQUENCY             PERCENTAGE

        POSITIVE          30                    70%

        NEGATIVE          0                     0%

        NEUTRAL           13                    30%

        TOTAL             43                    100%

SOURCE-Field survey 2010

The table 4.2.1.3 above reveals that a high proportion (70%) of the respondents felt

the impact of CSR is positive, none of the respondents felt it is negative and 30%

felt it is neutral.

9. Are there other benefits FBN Plc stands to gain aside profitability from the

execution of Corporate Social Responsibility?




                                        67
Table 4.2.1.4: Respondents response to question 9

       RESPONSES                    FREQUENCY            PERCENTAGE

       Large Customer Base          17                   40%

       Customer Confidence          12                   28%

       Good corporate Image         5                    11%

       Other Benefits               9                    21%

       TOTAL                        43                   100%

SOURCE- Field survey 2010

From the table 4.2.1.4 above, 40% of the respondent believes FBN also benefit

Large Customer Base, 28% believes it will have Customer Confidence, 11%

believes Good Corporate Image and 21% believes other benefit could be gained

from the execution of CSR projects apart from Profitability.



SECTION C:

10. Profit is increased by the activity of corporate social responsibility of the

company.




                                         68
Table 4.2.1.5: Respondents response to question 10

           RESPONDENT                         FREQUENCY PERCENTAGE

           STRONGLY AGREE                     8                19%

           AGREE                              20               47%

           UNDECIDED                          12               28%

           DISAGREE                           3                7%

           STRONGLY DISAGREE                  0                0%

           TOTAL                              43               100%

SOURCE- Field survey 2010

The table 4.2.1.5 of the responses above shows that 19% of the respondent strongly

agreed, 47% of the respondent agreed, 28% of the respondent was undecided, 7% of

the respondents disagreed while 0% of the respondent strongly disagreed that Profit

is increased by the activity of corporate social responsibility of the company. This

means that majority of the respondents believe that profit of the bank is increased by

the activity of CSR of the bank. This implies that the higher the CSR that higher the

profit of the bank.



11. Profit is decreased by the activity of corporate social responsibility of the

company.




                                         69
Table 4.2.1.6: Respondents response to question 11

           RESPONDENT                          FREQUENCY PERCENTAGE

           STRONGLY AGREE                      0               0%

           AGREE                               0               0%

           UNDECIDED                           10              23%

           DISAGREE                            20              47%

           STRONGLY DISAGREE                   13              30%

           TOTAL                               43              100%

SOURCE- Field survey 2010

The table 4.2.1.6 of the responses above shows that 0% of the respondent strongly

agreed, 0% of the respondent agreed, 23% of the respondent was undecided, 47% of

the respondents disagreed while 30% of the respondent strongly disagreed that Profit

is decreased by the activity of corporate social responsibility of the company.



12. Corporate Social Responsibility has no significant impact on the profitability of

the bank




                                          70
Table 4.2.1.7: Respondents response to question 12

            RESPONDENT                        FREQUENCY          PERCENTAGE

            STRONGLY AGREE                    0                  0%

            AGREE                             3                  6%

            UNDECIDED                         6                  14%

            DISAGREE                          19                 45%

            STRONGLY DISAGREE                 15                 35%

            TOTAL                             43                 100%

SOURCE- Field survey 2010

The table 4.2.1.7 of the responses above shows that 0% of the respondent strongly

agreed, 3% of the respondent agreed, 6% of the respondent was undecided, 19% of

the respondents disagreed while 15% of the respondent strongly disagreed that

Corporate Social Responsibility has no significant impact on the profitability of the

bank.



13. Corporate Social Responsibility has a significant impact on the profitability of

the bank.




                                         71
Table 4.2.1.8: Respondents response to question 13

             RESPONDENT                        FREQUENCY          PERCENTAGE

             STRONGLY AGREE                    15                 35%

             AGREE                             23                 5%

             UNDECIDED                         2                  5%

             DISAGREE                          3                  7%

             STRONGLY DISAGREE                 0                  0%

             TOTAL                             43                 100%

SOURCE- Field survey 2010

The table 4.2.1.8 of the responses above shows that 15% of the respondent strongly

agreed, 23% of the respondent agreed, 2% of the respondent was undecided, 19% of

the respondents disagreed while 3% of the respondent strongly disagreed that

Corporate Social Responsibility has a significant impact on the profitability of the

bank.

4.3 TEST OF HYPOTHESES

4.3.1 RESTATEMENT OF HYPOTHESES

H0:     Corporate Social Responsibility has no significant impact on the profitability

        of First Bank plc.

H1:     Corporate Social Responsibility has a significant impact on the profitability

of First Bank plc.


                                          72
The Pearson product moment correlation (PPMC) is used to establish and test the

relationship between the response of the bank staff and external stakeholders.

Pearson product moment correlation is denoted by ‗r‘.

 r which stands for the co efficient of correlation is defined below as




Where:

       r = Pearson‘s Product Moment correlation.

       ∑n= Number of pairs of values

       X = Independent variable (Corporate Social Responsibility)

       X = Mean of independent variable (Corporate Social Responsibility)

         Y = Dependent variable (Profitability)

       Y = Mean of dependent variable (Profitability).


In determining the relationship between the response of the bank staff and its

external stakeholders, question 13 of the staff and question 12 of the external

stakeholders were used.

Question 13 & 12: Corporate social responsibility has no significant impact on the

profitability of the bank.

The required response included strongly agree, agree, undecided, disagree and

strongly disagree.
                                          73
RESPONSE REQUIRED          Staff‘s Responds    External stakeholders
                           (x)                 responses (y)
STRONGLY AGREE             0                   0
AGREE                      1                   3

UNDECIDED                  3                   6

DISAGREE                   25                  19

STRONGLY                   17                  15
DISAGREE



X         Y       X-X    Y-Y          (X-X)2        (Y-Y)2      (X-X)(Y-Y)
0         0       -9.2   -8.6         84.64         73.96       79.12
1         3       -8.2   -5.6         67.24         31.36       45.92
3         6       -6.2   -2.6         38.44         6.76        16.12
25        19      15.8   10.4         249.64        108.16      164.32
17        15      7.8    6.4          60.84         40.96       49.92
46        43      0      0            500.8         261.2       355.4
X=

X=46/5

X=9.2

Y=

Y=43/5

Y=8.6

“r” =          355.4

         500.8 * 261.2   ―r‖ = 0.98
                                      74
“r” = 0.98 means that there is a positive strong relationship between the response of

the staff and that of the external stakeholders .

In order to test the degree of significance of the relationship at the particular degree

of freedom, the pearson product moment correlation coefficient table was used.

At 0.05 level of significance

Degree of freedom = N – 2

       Where N= 89 -2 = 87

Decision Rule:        If calculated r (rc) > tabled value (rt) reject H0

                      If tabled r > calculated value accept H0

From the result obtained the calculated r (rc) 0.98 is greater > tabled value (rt) 0.21

thus, reject H0 and accept H1.

This means that, the relationship is significant at 95% confidence level.

This confirms that there is a positive relationship between Corporate Social

Responsibility and profitability.




                                           75
4.4 ANALYSIS OF SECONDARY DATA

Data obtained from secondary sources which include First Bank annual report is

analyzed herein.

YEARS        Amount spent on CSR          Profit after tax
             (-N- Million)                (-N- Million)
2006         332,500                      19,831

2007         621,100                      21,543

2008         780,605                      30,473

2009         1,200,000                    35,074

SOURCE- Annual report of first bank plc (2006- 2009)



       1400000

       1200000

       1000000

        800000
                                                                      CSR
        600000                                                        PROFIT AFTER TAX

        400000

        200000

            0
                   2006       2007       2008        2009
A graph showing the impact of CSR on the profitability of the bank:




                                        76
                                   CHAPTER FIVE

SUMMARY, RECOMMENDATION AND CONCLUSION

5.0 INTRODUCTION:

This chapter tends to briefly revisit what was set out to achieve as previously stated

in chapter one of this study. It also introduces in few paragraphs what has been done

in the previous chapters. It will provide a smooth ground into the finding and

recommendation.

5.1 SUMMARY OF FINDINGS

It is very essential at this point to give a summary of the findings in order to give an

exhaustive view of the exercise.

The main focus of the study was to determine the impact of Corporate Social

Responsibility on the profitability of the Nigerian banking sector using First bank as

a case study. At the beginning of the study, the background of the study, statement

of research problem, objective of study and organization of the study were stated.

The reviewing of some literatures that are similar to the research work were not left

out.

In chapter one and two corporate social responsibility has been defined by many

writers who looked at it from numerous perspectives.The research work was

basically conducted to find out if First Bank embarks on CSR, if CSR has any

significant impact on the bank‘s profitability and to know if there are challenges

faced by the bank for embarking on CSR. In carrying out the study, primary and
                                          77
secondary sources of data were made use of in gathering relevant information. From

the information gathered, it was found that as CSR of the bank increases, there was a

corresponding increase in profits of the bank. For example in 2006 when the amount

spent on CSR was N 332,500m the reported profit after tax was N19, 831m , in

2007 the amount spent on CSR was N 621,100m the reported profit after tax was N

21,543m, in 2008, amount spent on CSR was N 780,605m and N30,473m was

reported as profit and in 2009 above          N1.2 Billion was spent on CSR and

N35,074m.

   Finally after concluding the survey, the following were found;

   a) Corporate social Responsibility is an accepted practice by both the bank and

       members of the host community. This was supported by the positive

       responds obtained from the questionnaire.

   b) There has been increasing amount spent on CSR (2006 – 2009) and a

       corresponding increase in the banks profit records (2006-2009), which is

       supported by the responses from the questionnaire that CSR has a positive

       impact on the profitability of the bank. Responses also showed that the bank

       stands to gain other benefits such as Large Customer Base, Customer

       Confidence, Good corporate Image and Other attributable Benefits aside

       profitable.




                                         78
      c) Corporate Social Responsibility also guarantees the customers‘ confidence

         and security of depositors‘ fund. From the responses gathered, it shows that

         more than of the half of the respondent strongly agree that Corporate Social

         Responsibility stand as a major factor in determining the Depositors‘fund.

5.2      RECOMMENDATION

Having review CSR and as it relates to bank‘s performance with regards to

profitability, the researcher therefore proposes to recommend the following

suggestions which could bring improvement to the benefit or impact of CSR

       CSR deserves greater attention and more commitment from corporate

         organizations;

       CSR projects should be well structured and implemented to have maximum

         impact. This would enhance the well-being of the beneficiaries;

       There should be co-ordination and collaboration of efforts and resources

         among corporate organizations in certain CSR projects where synergy is

         likely to have greater impact or where such projects are capital intensive;

       Corporate organizations should intensify efforts to educate the public on their

         primary responsibilities, various commitments to other stakeholders and

         operational/financial limitations. By doing so, the public will begin to show

         understanding and appreciation of the efforts and contributions of such

         organizations. This would stem cases of           incessant bashing with its

         accompanying damages
                                            79
       Attention need to be paid to CSR auditing in other not to reduce government

         revenue through Taxation and collaborate the regulatory task of government

         in the Business world.

5.3       CONCLUSION

From the result of the data collected and analyzed publications, I conclude that

corporate social responsibility has a significant impact on the profitability of banks,

and it is a positive impact, which includes good business relationship, good will

among other.




                                          80
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HANDY .C. (2002), ‗What‘s a Business For?‘ Harvard Business Review, Vol. 80,
No. 12, December 2002, pp. 49-55.

NKANBRA D.& OKORITE L. (2007) Corporate Social Responsibility Accounting.
The Nigerian Accountant Vol. 1. No 2, p.44.

Institute of Directors, UK, (2002) ―Corporate Social Responsibility today‖ Retrieved
on 15th October, 2009;
From http://www6.miami.edu/ethics/pdf_files/csr_guide.pdf

KESAPRAKORN, P. (2009) “Corporate Social Responsibility: A Triple Bottom
Line Investment to Create Business and Social Value for All‖ Retrieved on 10th
October 2009;
From http://www.ilo.org/actrav/lang--en/index.htm

NOYER, .C. (2003), ―The history and future of corporate social responsibility‖
Retrieved on 12th October 2009;
From:http://www.banquefrance.fr/gb/instit/telechar/discours/disc081028.pdf

                                        83
PAULA .S. (2009). “Opposition to Corporate Social Responsibility Friedman‘s
Theoretical Criticisms of CSR‖. Retrieved on 17th September 2009.

From:http://socialcorporateresponsibility.suite101.com/article.cfm/opposition_to_co
rporate_social_responsibility.

SAINTHOUSE, .P. (2009) ―Reactions to CSR- Does Anyone Care? Stakeholder
Disinterest in Corporate Social Responsibility ―. Retrieved on 17th September 2009.
From: http://social-corporate-
responsibility.suite101.com/article.cfm/opposition_to_corporate_social_responsibilit
y

WIEDMANN .K. PETER (2008) ―Corporate Social Responsibility, Stakeholder
Alignment, and Corporate Success‖ 2006, New York, USA.

Wikipedia (2007): “Corporate Social Responsibility”. Retrieved on 10th October
2009,
Fro: http://www.en.wikipedia.org/wiki/Corporate_social_responsibility

ZAIN, .M. (2008): ―Social Responsibility in Business Friedman & Carroll's
Differing Views on Business Responsibilities‖. Accessed on 17th December 2009.
From:http://businessmanagement.suite101.com/article.cfm/social_responsibility_in_
business.




                                        84
                             APPENDIX I

                                     DEPT. OF BUSINESS ADMINISTRATION,
                                     FACULTY OF BUS. & SOC. SCIENCES,
                                     UNIVERSITY OF ILORIN, ILORIN.
                                     May 13th, 2010.
Dear Respondent,
                            LETTER OF INTRODUCTION
The bearer is an undergraduate student in the above mentioned Department and he is
currently conducting a study on: THE IMPACT OF CORPORATE SOCIAL
RESPONSIBILITY ON PROFITABILITY IN NIGERIAN BANKING
INDUSTRY.
Your organization (First Bank of Nigeria Plc) has been chosen as the research case
study. This study is in partial fulfillment of the requirements for the award of B.sc
degree in Business Administration.
It would be appreciated if you could please assist in completing the attached
questionnaire while assuring you that all information provided will be treated in
strict confidence and mainly used for academic purpose.


Thanks you.

Yours faithfully,

ALAO SAMUEL OLAWALE
07/66MC101.




                                          85
                             APPENDIX II
                            UNIVERSITY OF ILORIN
              DEPARTMENT OF BUSINESS ADMINISTRATION
          QUESTIONNAIRE FOR STAFF OF FIRST BANK OF NIGERIA
SECTION A:
INSTRUCTION: Please tick (√ ) the correct answers from the options provided
below.
   1. Sex:            Male ( )    Female ( )

   2. Marital status: Single ( ) Married( ) Divorced ( ) Widowed ( )

   3. Age:            16-25( )   26-35( )      36-45( )     45 and above( )

   4. Status/Position:       Low level Manager( ) Mid level Manager( )

                             High level Manager( )

   5. How long have you been working for First Bank Plc?
                  Less than a Decade ( )       A decade and More ( )

   6. Educational Qualifications:   SSCE ( ) HND( ) B.sc( ) BA( )
                                    MBA/M.sc( ) Others( )

   7. Professional Qualifications: ACA( ) AATWA( )             ACCA( ) CIBN( )
                                   others ( )

SECTION B:
INSTRUCTION: Please tick (√ ) the correct answers from the options provided
below.
   8. What do you think about your bank embarking on CSR?
   Necessary ( )      Compulsory ( )        Voluntary ( )       Beneficial ( )
   9. What impact has the project / programme had on the community?
         Positive Impact ( ) Negative Impact ( ) Neutral ( )



                                         86
 10. Are there other benefits FBN Plc stands to gain aside profitability from the
     execution of Corporate Social Responsibility?
     Large Customer Base ( )                 Customer Confidence ( )
     Good corporate Image ( )        Other Benefits (   )

SECTION C:
      In the given section SA, A, U, D, SD have the under listed meaning;
SA- Strongly Agree;      Agree- A;    U- Undecided;      D- Disagree;       SD- Strongly
Disagree
INSTRUCTION: Please tick (√ ) the correct answers from the options provided
below.
                                                             SA A       U     D   SD
                                                             5   4      3     2    1
11   Profit is increased by the activity of corporate
     social responsibility of the bank (the company).
12 Profit is decreased by the activity of corporate
     social responsibility of the bank (the company).
13 Corporate Social Responsibility has no
     significant impact on the profitability of First bank
14 Corporate Social Responsibility has a significant
     impact on the profitability of the First bank.
15   Corporate Social Responsibility guarantees the
     customers‘ confidence level and security of
     depositor‘s fund?




                                           87
                                   APPENDIX III
                            UNIVERSITY OF ILORIN
               DEPARTMENT OF BUSINESS ADMINISTRATION
         THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY ON
               PROFITABILITY IN NIGERIA BANKING INDUSTRY
               ( A CASE STUDY OF FIRST BANK OF NIGERIA Plc)
Dear Sir/Ma,
This questionnaire id aimed at data collection on the impact of CSR on profitability
in the Nigeria Banking Industry using FBN Plc as a case study,. It is aimed at
carrying out research work in partial fulfillment of the requirements for the award of
Bachelor‘s Degree in Buisness Administration. Please, Kindly complete this
questionnaire as honesty and carefully as you can and be assure that information
provided will solely be used for the research.
Thank you for your co-operation.
QUESTIONNAIRE FOR EXTERNAL STAKEHOLDERS
Section A:
INSTRUCTION: Please tick (√ ) the correct answers from the options provided
below.
1. Sex                Male ( )     Female ( )

2. Marital status            Single( ) Married( ) Divorced( ) Widowed( )

3. Age         16-25( )   26-35( )      36-45( )       45 and above( )

4.    How long have you been banking with First Bank Plc?
      less than a Decade ( )    A decade and More ( )

5.    The volume of transaction with First Bank Plc?

         High ( )       Medium ( )          low ( )



                                          88
SECTION B:
INSTRUCTION: Please tick (√ ) the correct answers from the options provided
below.
6. Which of these other banks do you operate an account with? Zenith Bank( )
    Oceanic Bank( )      Intercontinental Bank( )   GT Bank( ) Other Banks ( )
7. Are you aware that First Bank embarks on any project / programme that are
    beneficial to the people in your community?
    Yes ( )     No ( )         Undecided ( )

8. What impact has the projects / programme had on the community?
         Positive Impact ( ) Negative Impact ( ) Neutral ( )
9. Are there other benefits FBN Plc stands to gain aside profitability from the
    execution of Corporate Social Responsibility?
Large Customer Base (     )   Customer Confidence ( )
Good corporate Image ( ) Other Benefits ( )




                                         89
    SECTION C:
    INSTRUCTION: Please tick (√) the correct answers from the options provided
    below.
      In the given section SA, A, U, D, SD have the under listed meaning;
SA- Strongly Agree;        Agree- A;      U- Undecided;         D- Disagree; SD-
Strongly Disagree
                                                                SA   A    U        D   SD
                                                                5    4    3        2   1
     10      Profit is increased by the activity of corporate
          social responsibility of the bank (the company).
     11 Profit is decreased by the activity of corporate
          social responsibility of the bank (the company).
     12 Corporate Social Responsibility has no
          significant impact on the profitability of First
          bank
     13 Corporate        Social    Responsibility    has   a
          significant impact on the profitability of the
          First bank.
     14      Corporate Social Responsibility guarantees the
          customers‘ confidence level and security of
          depositor‘s fund?




                                               90

				
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