Corporate Social Responsibility And Financial Performance Of Micro Finance Institutions In Mombasa County, Kenya

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ABSTRACT

Over the last four decades, the pressure on organizations to engage in CSR has

increased. Being socially responsible involves costs and therefore it should be

beneficial to the business and improve sustainability. This study sought to investigate

the influence of corporate social responsibility (CSR) on financial performance of

microfinance institutions in Mombasa County. The specific objectives of this study

were to determine how the firms participation in environmental activities influences

the financial performance, to examine the extent to which CSR programs on health

influences financial performance and to establish how CSR programs on education

influences financial performance. Stakeholder, Integrative and Theory of the firm

theories were employed in the study. CSR has been associated with financial

performance for organizations but this area has been scantily researched. The study

sought to answer the question whether CSR activities of MFIs in Mombasa County

have impact on financial performance. To achieve the objective of the study, the

researcher adopted a descriptive research design in explaining the relationship

between variables in the study. The study population included all the microfinance

institutions that are members of AMFI and are situated and operate in Mombasa

County. The target population for the study was 34 respondents comprising of the

finance managers and branch managers of the 17 microfinance institution that are

members of AMFI and are located in Mombasa County. Data collection instrument

was questionnaire. The data was then analyzed and the findings recorded by the help

of tables and figures. Data analysis was conducted using statistical package for social

sciences (SPSS). Data analysis was based on the findings on amounts spent on

environment, health and education for five years compared to the net profits and

return on investments realized by the microfinance institutions over the period. It was

noted that MFIs regard adoption of environmental measures to be of higher

importance since it improves relations with suppliers, institutions, donors, community

as shown(M=4.12, SD= 0.43). The analysis showed that CSR programs on Health had

the strongest positive (Pearson correlation coefficient =.616; P value 0.000) influence

on Net profit. Additionally Health had the strongest positive (Pearson correlation

coefficient =.922; P value 0.000) influence on ROI. CSR programs on Education, and

Environmental activities were positively correlated to Net profit of microfinance

institutions (Pearson correlation coefficient = .605 and .600). The finding shows that

most of the respondents cited that improving relations with suppliers, institutions,

donors, and community was very important through adoption of health activities for

corporate social responsibility as shown by a calculated mean of 4.43 and standard

deviation of 0.57. The results indicates that most of the respondents mentioned that

Benefit of the adoption of education programs for social responsibility enhances

corporate reputation. This was supported by a calculated mean of 4.67 standard

deviation of 0.43.The study concluded that environmental concerns, health programs

and education programs affect financial performance of microfinance institutions. It is

therefore recommended that the management of MFIs should carry out an audit of the

Corporate Social Responsibility projects they have implemented and provide the

shareholders with comprehensive reports on the same in order to ensure that

shareholders wealth are well utilized. Further research could be done on the financial and non financial determinants of CSR in Kenya.

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APA

Research, S. & NJUE, N (2021). Corporate Social Responsibility And Financial Performance Of Micro Finance Institutions In Mombasa County, Kenya. Afribary. Retrieved from https://afribary.com/works/corporate-social-responsibility-and-financial-performance-of-micro-finance-institutions-in-mombasa-county-kenya

MLA 8th

Research, SSA, and NDWIGA NJUE "Corporate Social Responsibility And Financial Performance Of Micro Finance Institutions In Mombasa County, Kenya" Afribary. Afribary, 26 May. 2021, https://afribary.com/works/corporate-social-responsibility-and-financial-performance-of-micro-finance-institutions-in-mombasa-county-kenya. Accessed 05 Oct. 2022.

MLA7

Research, SSA, and NDWIGA NJUE . "Corporate Social Responsibility And Financial Performance Of Micro Finance Institutions In Mombasa County, Kenya". Afribary, Afribary, 26 May. 2021. Web. 05 Oct. 2022. < https://afribary.com/works/corporate-social-responsibility-and-financial-performance-of-micro-finance-institutions-in-mombasa-county-kenya >.

Chicago

Research, SSA and NJUE, NDWIGA . "Corporate Social Responsibility And Financial Performance Of Micro Finance Institutions In Mombasa County, Kenya" Afribary (2021). Accessed October 05, 2022. https://afribary.com/works/corporate-social-responsibility-and-financial-performance-of-micro-finance-institutions-in-mombasa-county-kenya