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