THE EFFECT OF CORPORATE SOCIAL RESPONSIBILITY ON FINANCIAL PERFORMANCE OF QATARI BANKS

Abstract

Recently, Qatar has witnessed a wide growth and expansion in all fields. International companies are working on having a branch in Qatar due to being the fastest developing country in GCC region. This fact has increased the competition especially for local business. Moreover, Qatar National Vision 2030 and 2022 FIFA World Cup increased the standards for organizations. One of these standards is Corporate Social Responsibility (CSR). Although many organizations are working hard to adopt CSR in their day to day activities, some studies claimed that there is no relationship between corporate social responsibility and companies’ performance. The main reason for selecting this topic is to close this gab by focusing on one field which is banking field to reveal the effect of corporate social responsibility on the financial performance of Qatari banks. This study was conducted for the last 5 years starting from 2013 to 2017 and used four variables. First: total bank investment that was measured by loans and advances to customers, investment securities, and investment in associates. Second: CSR investments which was measured by the monetary disbursements on social events and activities. Third: banks financial performance which was represented by the net profit obtained from audited financial statements. Fourth: Operating Segment Net Profit Before Tax includes loans, credit cards, deposits and other transactions for retail and corporate customers. The study includes descriptive statistics and influential statistics. It has used the multiple regression analysis to determine the relation between banks’ financial performance and corporate social responsibility. NPBT was the dependent variable whereas Operating Segment Profit, CSR and Total bank investments were the independent variables The result shows there is a strong relationship between corporate social responsibility and bank’s financial performance. Bank contribution to CSR will affect the financial performance of Qatari banks. Although some banks were excluded from the study because of insufficient data, the majority of banks had reported CSR clearly which reflects their awareness of its importance. The study would add value to the Qatari business world. The provided evidence for the significant relationship between CSR and Bank’s financial performance can be generalized to other business fields. Also, it would motivate business entities that do not disclose their CSR activities or even do no adopt it to rethink about their strategy as each and every business looks forward to achieving better financial performance. Moreover, it would encourage researchers to search deeply behind CSR topic within banking fields or in other fields. Last but not least, the result would encourage Qatari businesses and organizations to invest heavily in the CSR in order to be able to continue operating in the Qatari market under the global competition.