Determinants Of Financial Performance Of Banks In Ethiopia: Corporate Social Responsibility (CSR) And Non Corporate Social Responsibility (CSR) Factors

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2024-12-04

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A.A.U

Abstract

The study aims to explore the Determinants of Financial Performance of Banks in Ethiopia: Corporate Social Responsibility (CSR) And Non CSR Factors. It investigates how philanthropic CSR, capital intensity, credit risk, and bank size affect banks’ financial outcomes. The research adopts a quantitative methodology. The regression model explained approximately 37.4% of the variance in ROA, with an adjusted R-squared value of 33.2%. The study reveals that philanthropic CSR positively correlates with financial performance, suggesting that banks engaging in social welfare activities can experience financial benefits. Capital intensity and credit risk are also found to have significant effects on financial performance, while the impact of bank size is more complex. The research concludes that CSR, particularly philanthropic efforts, can enhance a bank’s financial performance. It also highlights the importance of managing capital intensity and credit risk to improve financial outcomes. The study recommends that banks integrate CSR into their strategic planning to leverage its financial benefits. It also suggests that policymakers create supportive environments for CSR practices to flourish, potentially leading to improved financial performance across the banking sector. The research contributes to the academic discourse on CSR and provides practical insights for businesses and policymakers in Ethiopia.

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