Corporate Social Responsibility and Financial Performance: A Case Study of Jamuna Bank Limited, Bangladesh

Abstract

Banking is a business which runs on the confidence and the trust of people that enables the bank to mobilize funds from various sources. The profitability of a bank always depends on the efficient management of fund and exploring the genuine avenues in which its resources are invested to produce the maximum income. The purpose of the study is to discover the impact of Corporate Social Responsibility (CSR) expenditure on the profitability of Jamuna Bank Ltd (JBL) which indicates the fundamental picture of the overall banking industry of Bangladesh. JBL is one of the non-government commercial banks in Bangladesh, for this study purpose CSR expenditure is taken as the independent variable and profit after tax (PAT) as the dependent variable. Required data are collected from the annual reports of JBL and Bangladesh Bank CSR review for the year 2007 to 2012 and analyzed using Ordinary least squares (OLS) model and tested the hypothesis through the student’s t test. The results show that there is no significant impact of CSR on PAT and therefore recommends the bank to critically evaluate its existing policy on performing CSR activities to increase profitability. For academic and industry discourse it is suggested that further study should be conducted to establish the real value, in monetary terms, how much CSR contribute to the organization’s profitability.