Corporate Social Responsibility Expenditures and Bank Performance: Role of Size Among Listed Banks in Ghana

This study investigates the relationship between listed Ghanaian banks’ financial performance and corporate social responsibility (CSR), given the anticipated increase in businesses’ social duties. This study utilizes a panel autoregressive distributive lag model (Panel ARDL) to examine the impact of CSR on bank financial performance, as well as the moderating effect of bank size on CSR and financial performance, using return on assets as the measure of financial performance. All banks listed on the Ghana Stock Exchange (GSE) whose financial statements are readily accessible online, in print, or on their websites are chosen using convenience sampling. The sample spans 14 years, from 2010 to 2023. The results are shown for both the long and short run. Contrary to the expectations of many proponents of CSR, we find that firms incorporating CSR in their undertakings have negative financial performance. Additionally, the study finds that, relative to smaller banks, larger banks are able to alleviate this negative effect of CSR on performance by a certain magnitude. Therefore, not only should banks be strategic in their CSR implementation, but they should strive to grow their assets to the level where the negative effects of undertaking CSR could be reduced, if not entirely eliminated. To achieve this growth, the level of assets to keep is found to be above GHC 3922.52 million.