Chapter 16: The Effects of Corporate Social Responsibilities on the Financial Performance of RCBs in Ghana: The Moderating Role of Board Quality

This chapter aims to examine the moderating role of corporate governance on the relationship between corporate social responsibility (CSR) and the financial performance of some selected rural and community banks (RCBs) in Ghana. Using cluster and convenient sampling, the researchers distributed questionnaires to all senior staff and board members of the sampled 27 RCBs in the Bono, Bono East, Ahafo, and Ashanti Regions of Ghana. In analyzing the research data, stakeholder and agency theories were used combined with the ordinary least square (OLS) regression modeling method and proxies of the moderator variable to ensure robustness. CSR, among the sampled RCBs, tends to be high on philanthropic and economic responsibilities due to its potential economic returns. Hence, there is a positive relationship between engagement in CSR activities and the financial performance of RCBs in Ghana. Nonetheless, in the short term, there is a negative relationship between the expenditure on CSR activities in a given year and RCBs’ financial performance. Again, there is a complementary moderating effect of corporate governance quality on the relationship between CSR and the financial performance of RCBs in Ghana. This study provides vital information to policymakers in ensuring board quality and CSR as a vessel for improving financial performance.