Effect of Corporate Social Responsibility on the Profitability of Deposit Money Banks in Nigeria

ABSTRACT   This study examined the effect of corporate social responsibility on the profitability of deposit money banks in Nigeria. Specifically, the study investigated the effect of employee training cost on the profitability of deposit money banks in Nigeria, examined the effect of environmental cost on the profitability of deposit money banks in Nigeria, determined the effect of community development cost on the profitability of deposit money banks in Nigeria and ascertained the effect of donation on the profitability of deposit money banks in Nigeria. The study adopts expo-facto research design. The data comprises annual time series spanning from 2013 through 2022. The research employs only quantitative method of data analysis. Considering the outcome variable that is dichotomous, panel data regression analysis which includes fixed effect estimation and random effect estimation was considered appropriate to test the formulated hypotheses. The selection of the best-suited model from the two will be achieved through Hausman test. This test represents a distance measure between Random Effect Model and Fixed Effect Model with an H0 that the Random Effects are better, consistent and efficient. From the analysis result, it was discovered that employee training cost has a negative but significant effect on the profitability measured with return on asset of deposit money banks in Nigeria. Also, it was revealed that environmental cost has a positive but insignificant effect on the return on asset of deposit money banks in Nigeria. Furthermore, it was revealed that community development cost has a negative insignificant effect on the performance measured with return on asset of deposit money banks in Nigeria. Based on the reported findings, it was established that there is a statistically significant effect of corporate social responsibility on profitability of deposit money banks in Nigeria.  Hence, it was recommended that management of deposit money banks should ensure compliance with the guidelines of environment cost reporting as this portrays good image of their firm.