Corporate Social Responsibility and Financial Performance of Commercial Banks in Rwanda: A Case of BPR Bank Rwanda Plc

Abstract

Corporate Social Responsibility (CSR) denotes firms’ commitment to conduct their activities ethically by considering their social, economic and environment effects. CSR can be vital for commercial banks in Rwanda in creating lasting corporate image that serve to benefit their financial performance. The present research examined the contribution of CSR on financial performance of commercial banks in Rwanda using a case of BPR Bank Rwanda Plc, located in Nyarugenge District, Rwanda. A descriptive and correlational research design was adopted using both quantitative and qualitative approaches. The target population of this research was 125 employees from the bank and sample size of 96 selected using stratified random sampling technique. Data collection was done using questionnaire and interview guide. Secondary data was obtained using desk research from financial statements published by the bank. Pearson correlation and multilinear regression analyses were performed to measure the effect. The findings on employee trainings (r=0.233, p=0.022) was significantly and positively related to financial performance of commercial banks. Since the p-value was less than 5%, then the correlation was statistically significant. Similarly, charity work (r=0.283, p=0.005) and community development projects (r=0.475, p=0.000) positively influence the financial performance of BPR, since the p-value were less than 5%. All the indicator variables of CSR were seen to have positive effect on financial performance of commercial banks though with low correlation. The regression model (F=23.917, p=0.000) was statistically significant since the p-value was less than 5%. The researcher recommends that bank managers should analyze the viability of the current CSR strategies before launching new strategies. It is only after critical analysis that managers can use new CSR strategies. They should also make sure that any new CSR strategies are aligned to the overall mission and vison of the bank.