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Effect of CSR on the Financial Performance of Financial Institutions in Kenya

Author

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  • Martin Kamau Muchiri

    (Doctoral School of Economics and Regional Sciences, Hungarian University of Agriculture and Life Sciences, Páter Károly u. 1., 2100 Gödöllo, Hungary)

  • Szilvia Erdei-Gally

    (Institute of Technology, Hungarian University of Agriculture and Life Sciences, Páter Károly u. 1., 2100 Gödöllo, Hungary)

  • Mária Fekete-Farkas

    (Institute of Agricultural and Food Economics, Hungarian University of Agriculture and Life Sciences, Páter Károly u. 1., 2100 Gödöllo, Hungary)

Abstract

Corporate social responsibility (CSR) is an integral path towards realizing vision 2030 and the sustainable goals of the UN, as well as the sustainable development of individual countries. However, in recent years it has become increasingly clear that these goals cannot be achieved without sustainable corporate practices. Previous research seeking determine the effect of CSR on the financial performance of various institutions have yielded different results, leaving geographical, sectorial, and scholarly gaps. This study aimed to discover the effect of CSR on the financial performance of financial institutions in Kenya, as this country lacks a direct association between CSR and corporate financial performance (CFP). We focused on examining the effect of ethical, charitable, and gender-mainstreaming CSR activities on the financial performance of financial institutions in Kirinyaga County. A study population of 300 employees working in the financial institutions in Kirinyaga County was included, and a sample of 171 participants was selected using stratified and systematic sampling techniques. A causal research design was adopted, and data were analyzed using SPSS software. Questionnaires were administered in person to gather primary data. The study found a strong positive relationship between CSR practices and the financial performance of financial institutions and recommends that firms invest more in ethical, charitable, and gender-mainstreaming CSR activities, as such activities positively influence their financial performance.

Suggested Citation

  • Martin Kamau Muchiri & Szilvia Erdei-Gally & Mária Fekete-Farkas, 2022. "Effect of CSR on the Financial Performance of Financial Institutions in Kenya," Economies, MDPI, vol. 10(7), pages 1-23, July.
    • Handle: RePEc:gam:jecomi:v:10:y:2022:i:7:p:174-:d:866490
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    References listed on IDEAS

    as
    1. Sang Jun Cho & Chune Young Chung & Jason Young, 2019. "Study on the Relationship between CSR and Financial Performance," Sustainability, MDPI, vol. 11(2), pages 1-26, January.
    2. Muzhar Javed & Muhammad Amir Rashid & Ghulam Hussain & Hafiz Yasir Ali, 2020. "The effects of corporate social responsibility on corporate reputation and firm financial performance: Moderating role of responsible leadership," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(3), pages 1395-1409, May.
    3. Yung-Heng Lee & Lori Tzu-Yi Yang, 2021. "Corporate social responsibility and financial performance: a case study based in Taiwan," Applied Economics, Taylor & Francis Journals, vol. 53(23), pages 2661-2670, May.
    4. Lone Engbo Christiansen & Ms. Huidan Huidan Lin & Ms. Joana Pereira & Petia Topalova & Ms. Rima A Turk, 2016. "Gender Diversity in Senior Positions and Firm Performance: Evidence from Europe," IMF Working Papers 2016/050, International Monetary Fund.
    5. Simona Galletta & Sebastiano Mazzù & Valeria Naciti & Carlo Vermiglio, 2022. "Gender diversity and sustainability performance in the banking industry," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(1), pages 161-174, January.
    6. Brown, William O. & Helland, Eric & Smith, Janet Kiholm, 2006. "Corporate philanthropic practices," Journal of Corporate Finance, Elsevier, vol. 12(5), pages 855-877, December.
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