“Effects of Corporate Social Responsibility on Bank’s Financial Performance: The Case of Cooperative Bank of Oromia, in Ambo Town, Ethiopia”

Abstract

The purpose of this study was to investigate the effects of corporate social responsibility (CSR) on the financial performance of Cooperative Bank of Oromia Share Company. An explanatory research design, which involved quantitative and qualitative research approach, was employed. The study was based on primary data collected from census or 77 respondents selected by non probability sampling. In addition to this, key informant interview was also made from higher officials of banks to compare with the quantitative regression result. The collected data were analyzed by IBM SPSS Version 23 statistical software program. A descriptive statistics like frequency, percentage, mean and standard deviation were used to summarize the data collected on the effects of corporate social responsibility (CSR) on the financial performance of Cooperative Bank of Oromia Share Company. A Multiple linear regression was used to summarize the data collected on the effects of corporate social responsibility (CSR) on the financial performance of Cooperative Bank of Oromia Share Company. The result of the study showed that community aspect of CSR, employee aspect of CSR, customers Aspect of CSR are positively and significantly influenced financial performance of cooperative bank of Oromia share company. The findings indicate that CSR activities focused on employees such as training programs, welfare, and equitable promotion practices significantly enhance the bank's financial performance. The study concluded that the effects of corporate social responsibility on bank’s financial performance not satisfactory. It is recommended that banks should improve their efforts exerted towards their CSR practice in order to enhance the financial performance of the bank.