The Effect of CSR on the Financial Performance of Nigerian Banks: The Moderating Effect of Customer Loyalty

Abstract

Numerous studies have been conducted to investigate how corporate social responsibility (CSR) affects corporate financial performance (CFP), but this direct relationship appears to be complex. As a result, the main aim of this study is to investigate how customer loyalty shapes the association between CSR and financial performance. Previous studies propose using an intermediate variable known as a mediating or moderating variable to strengthen the link between CSR and CFP. From the perspective of Nigerian commercial banks, this study empirically explores the moderation of customer loyalty on the correlation between CSR and corporate financial performance. This study relied on secondary data from the annual report as well as primary data from questionnaires. A total of 446 questionnaires were surveyed from the customers of nine commercial banks listed on the Nigerian stock exchange. This study adopted structural equation modelling to test the established hypotheses. The result proves that CSR enhances corporate financial performance. Similarly, customer loyalty serves as a moderating factor to further solidify this relationship. Using a moderating variable, this research has strengthened the connection between CSR and financial performance, adding to the body of knowledge. Additionally, the research findings have provided valuable insight that is critical in making key decisions.