An analytical study of corporate social responsibility and financial performance in banking sector of Sri Lanka

Abstract

Corporate Social Responsibility (CSR) reporting has become an increasing trend in the corporate world. It is a relatively new concept but has become a major research topic in the accounting profession. In recent years, few notions have so fully captured the corporate imagination as that of corporate social responsibility (CSR), defined broadly as a company’s status and activities with respect to its perceived societal or, at least, stakeholder obligations. While CSR is by no means a new idea, more companies than ever before are backing CSR initiatives such as corporate philanthropy, cause-related marketing, minority support programs, and socially responsible employment and manufacturing practicesand they are doing so with real financial and marketing muscle.The motivations behind why companies make voluntary CSR disclosures are unclear. This paper aims to analytically explore the relationship between Corporate Social Responsibility and financial performance among the ten selected banks in Sri Lankan. CSR is measured by using of “Nila Unit” andfinancial performance is measured using two financial ratios namely; Return on Equity and Return on Assets. For the measurement of “Nila Unit” it was used 77 Key words with relates to corporate social Responsibility. This is carried out to see to what extent CSR activities are affected on each banks financial performance over seven years of time.The results indicates that there is a significant positive relationship between Corporate Social Responsibility and Financial Performance.