IDEAS home Printed from https://ideas.repec.org/a/gam/jecomi/v10y2022i7p174-d866490.html

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-7099/10/7/174/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2227-7099/10/7/174/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. 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.
    2. 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.
    3. 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.
    4. Brown, William O. & Helland, Eric & Smith, Janet Kiholm, 2006. "Corporate philanthropic practices," Journal of Corporate Finance, Elsevier, vol. 12(5), pages 855-877, December.
    5. 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.
    6. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ying, Limeng & Zhang, Jiaming & Zhu, Junyi & Gan, Yufei, 2024. "Impact of corporate philanthropy on firm performance: The moderating role of board structure," Research in International Business and Finance, Elsevier, vol. 72(PA).
    2. Basma Bchennaty & Muhammad Nauman Khan & Mazen Massoud & Tamima Elhassan, 2024. "Appraising the Role of Strategic Control in Financial Performance: The Mediating Effect of the Resource Allocation Process—The Case of the Ministry of Finance–North Lebanon," IJFS, MDPI, vol. 12(3), pages 1-31, September.
    3. Angela Boateng & Byron Lew & Yi Liu, 2025. "Corporate Social Responsibility Expenditures and Bank Performance: Role of Size Among Listed Banks in Ghana," JRFM, MDPI, vol. 18(3), pages 1-25, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ibrahim Sameer, 2021. "Impact of corporate social responsibility on organization’s financial performance: evidence from Maldives public limited companies," Future Business Journal, Springer, vol. 7(1), pages 1-21, December.
    2. Adamska Agata & Dąbrowski Tomasz J. & Homa Magdalena & Mościbrodzka Monika & Tomaszewski Jacek, 2022. "Demutualization, Corporatization, and Sustainability Initiatives: Evidence from the European Stock Exchange Industry," Journal of Management and Business Administration. Central Europe, Sciendo, vol. 30(3), pages 2-35, September.
    3. Chun Cai & Saddam A Hazaea & Maha Faisal Alsayegh & Muskan Sahu & Moodhi Raid & Waleed M Al‐ahdal, 2024. "Media coverage as a moderator in the nexus between audit quality and ESG performance: Evidence from China," PLOS ONE, Public Library of Science, vol. 19(10), pages 1-25, October.
    4. José Manuel Santos‐Jaén & Antonia Madrid‐Guijarro & Domingo García‐Pérez‐de‐Lema, 2021. "The impact of corporate social responsibility on innovation in small and medium‐sized enterprises: The mediating role of debt terms and human capital," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(4), pages 1200-1215, July.
    5. Agustina, Lidya, 2021. "Does financial performance moderate the effect of CEO characteristics and stakeholder influence on corporate social responsibility in Indonesia?," Technium Business and Management, Technium Science, vol. 2(1), pages 13-29.
    6. Chang Seop Rhee & Seung Bum Soh & Seunghee Yang, 2025. "Charitable Donations for Corporate Sustainability: Exploring the Impact on the Firm Value of Korean Game Companies," SAGE Open, , vol. 15(2), pages 21582440251, June.
    7. Jonah Tyan & Shih-Ching Liu & Carol Yeh-Yun Lin & Tien-Yu Chang, 2025. "Unlocking the Connection between Corporate Social Responsibility Strategy and Firm Performance: Unveiling Mediating and Moderating Effects," Journal of Business Ethics, Springer, vol. 197(3), pages 597-611, March.
    8. Ferrell, Allen & Liang, Hao & Renneboog, Luc, 2016. "Socially responsible firms," Journal of Financial Economics, Elsevier, vol. 122(3), pages 585-606.
    9. Rubio-Andrés, Mercedes & Ramos-González, Mª del Mar & Sastre-Castillo, Miguel Ángel & Gutiérrez-Broncano, Santiago, 2023. "Stakeholder pressure and innovation capacity of SMEs in the COVID-19 pandemic: Mediating and multigroup analysis," Technological Forecasting and Social Change, Elsevier, vol. 190(C).
    10. Ali Uyar & Habiba Al-Shaer & Cemil Kuzey & Abdullah S. Karaman, 2026. "Board characteristics and aggressive CSR engagement: Do CSR committees provoke or restrain?," Review of Quantitative Finance and Accounting, Springer, vol. 66(1), pages 269-311, January.
    11. Wong, Woei Chyuan & Batten, Jonathan A. & Ahmad, Abd Halim & Mohamed-Arshad, Shamsul Bahrain & Nordin, Sabariah & Adzis, Azira Abdul, 2021. "Does ESG certification add firm value?," Finance Research Letters, Elsevier, vol. 39(C).
    12. Nhat Minh Tran, 2022. "CEO and Chairperson Characteristics and Corporate Environmental Performance: A Study of Cooperatives in Vietnam," SAGE Open, , vol. 12(4), pages 21582440221, October.
    13. Jun Chen & Wang Dong & Jamie Tong & Feida Zhang, 2018. "Corporate Philanthropy and Tunneling: Evidence from China," Journal of Business Ethics, Springer, vol. 150(1), pages 135-157, June.
    14. Pamela Kent & Robyn McCormack & Tamara Zunker, 2021. "Employee disclosures in the grocery industry before the COVID‐19 pandemic," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(3), pages 4833-4858, September.
    15. Aneta Oniszczuk-Jastrząbek & Ernest Czermański & Giuseppe T. Cirella, 2020. "Sustainable Supply Chain of Enterprises: Value Analysis," Sustainability, MDPI, vol. 12(1), pages 1-15, January.
    16. Ayomikun Solomon Adewumi & Alex Opoku & Zainab Dangana, 2024. "Sustainability assessment frameworks for delivering Environmental, Social, and Governance (ESG) targets: A case of Building Research Establishment Environmental Assessment Method (BREEAM) UK New Construction," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(5), pages 3779-3791, September.
    17. Yongqiang Gao & Ya Lisa Lin & Haibin Yang, 2017. "What’s the value in it? Corporate giving under uncertainty," Asia Pacific Journal of Management, Springer, vol. 34(1), pages 215-240, March.
    18. Homeyra Khatami & Neda Abdolvand & Saeid Homayoun & Saeedeh Rajaei Harandi, 2025. "Sustainable Development and Corporate Profitability: Data Mining Approach," Information Systems Frontiers, Springer, vol. 27(5), pages 1973-2000, October.
    19. Shu Wang & Ying-Kai Liao & Wann-Yih Wu & Khanh Bao Ho Le, 2021. "The Role of Corporate Social Responsibility Perceptions in Brand Equity, Brand Credibility, Brand Reputation, and Purchase Intentions," Sustainability, MDPI, vol. 13(21), pages 1-19, October.
    20. Uzma Bashir, 2017. "Determinants of Corporate Philanthropy: A Case of Karachi Stock Exchange," International Econometric Review (IER), Econometric Research Association, vol. 9(1), pages 19-36, April.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jecomi:v:10:y:2022:i:7:p:174-:d:866490. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.