CHAPTER ONE: INTRODUCTION

1.1 Background of the Study

The need to consider the social and environmental impact of business operations has been

growing steadily and becoming increasingly important. Engaging in social responsibility

activities and disclosures has emerged as an important dimension of corporate practice.

The acknowledgment of social responsibility of the banking sector implies the need to recognize

the importance of disclosure of information on organization’s activities related to such

responsibility.

Corporate Social Responsibility is presently defined by the World Business Council of

Sustainable Development as persistent commitment by businesses to behave ethically and

contribute to economic development while also increasing the quality of life of employees, their

families, the community, customer and other stakeholders interactions and activities and where

possible, the consequences of those interactions and activities”. (Adeleke C., 2014).

“Social Responsibility of the banking sector has to do with serving the community and achieving

public benefits, maintaining a balance between the basic organizational objectives and the sub-

objectives related to the public interest, including health and social insurance, charitable

donations and support of cultural and social activities” (Al-Hamadeen, 2002).The debate about

corporate social responsibility began in the last half of the twentieth century as a way to educate

business persons on how to behave in a socially responsible manner by responding to the

evolution of societal demands ( Idemudia, 2011). Social Responsibility has significantly evolved

since then, and its current conception was devised by heads of state and non-governmental

organizations at the United Nations (UN) sponsored Earth Summit in Rio de Janeiro, Brazil, in

1992 (Adeyanju, 2012). Jenkins (2005) contended that in the late 1990s, leaders of the World
Bank and other international agencies began to incorporate CSR into their frameworks due to a

paradigm shift in eradicating "poverty and hunger, achieving universal primary education,

promoting gender equality, reducing mortality and improving health, and ensuring environmental

sustainability” in an attempt to improve businesses and their behavior.

Social Responsibility is applicable to many types of organizations; however, banks are most

sensitive to Corporate Social Responsibilities because the banking sector includes a diverse

group of individuals (Achua, 2008). Banks are generally opaque, rather than transparent in

comparison to other financial institutions; this opacity can easily disguise problems (Awotundun,

Kehinde 2011).

There is no business organization that can exist in isolation; it must have community that it

associates with in terms of location for its successful operations. Thus, there must be some

practical roles that the organization must play for its impact to be felt by community where the

business operate. For example, the installation of pollution control equipment might improve the

quality of air and water in plants surrounding the area. This may also result in a change in

production cost and possible increase in the process of goods produced. The society increasingly

becomes aware of the interdependence, so also do the managers of organizations. As a result,

organization’s, especially in the banking sector are no longer viewed as totally private

endeavours that are free to pursue their own ends as long as they do not break the law, instead,

their actions are seen as having public consequences that go beyond serving customers and

paying returns to others. Thus, social responsibilities of the banking sector have become a

significant issue for today’s economy growth in Nigeria.

The banking sector is the engine for economic growth and development of the economy. The

Nigerian banking sector works within survives on the wealth in the Nigerian economy
(Nwakama, Okereke, & Arewa, 2012)

The focus of this study tends to assess the contributions of social responsibility of banks to the

economic wellbeing of Nigerian using united Bank for Africa UBA, Anyigba Branch.

1.2 Statement of the Problem

The issue of social responsibility in the banking sector has gain prominence in the world because

of its importance and relevance (Rob, 1999). We do not need to go far before we see the menace

of these two weapon As we know that no business organization can exist in isolation, therefore,

the business organization must monitor what is going on in its environment like technological,

political, financial economic, infrastructure, e.t.c. for its survival and also be responsible to the

community, government, customers, shareholders, employees, environment, by doing, the

business in contributing to the welfare of the people in its environment.

Inability of monitoring and irresponsibility has killed some banks; more also has made them to

buckle under. They have failed to rise up, where others have risen.

Against the back drop of the foregoing problems, this study will examine the contribution of

social responsibilities of banks to the economic wellbeing of the Nigeria economy using United

Bank of African as a case study.

1.3 Research Questions

The following research questions were derived:-

i. What are the contributions of social responsibility of the banking sector to the Nigeria

economy?

ii. Based on the stakeholders theory framework, what aspects of social responsibilities in

the banking sector has contributed to the economic wellbeing of Nigerian in particular,

the place of business location?

iii. What are the challenges or factors militating the banking sector to discharge their social

responsibilities to the growth of the country (Nigeria) economic development?

1.4 Objectives of the Study

The main objective of the study is to examine and assess the effect of Social Responsibility of

the Banking sector to Nigeria economy.

Other specific objectives include:

i. To determine and examine the aspects of social responsibilities in the Nigerian baking

sector based on the stake holders theory frame work.

ii. To determine the impact of social responsibility on banks product and services

pricing in Nigeria.

iii. To examine the challenges facing banks in discharging their social responsibilities to

the well being of the Nigeria economy.

1.5 Statement of Hypothesis

The following hypothesis will be tested in the course of this research work:-

H 0 : The banking sector does not have social responsibility impact on the Nigeria economy

H 1 : The banking sector has social responsibility impact on the Nigeria economy.

H 0 : Social responsibilities does not have any significant impacts on the banking sector in

Nigeria.

H1 Social responsibilities have significant impacts on the banking sector in Nigeria.

1.6 Significance of the Study

It springs from the measurement of the extent to which banks’ management understands and are

aware of the effect of social responsibility on the wellbeing of Nigeria economy.

It represent recommendations to take appropriate actions for enhancing and strengthening the
weakness and improvement, the overall performance of banking sector in Nigeria to secure

enhancement of their economic, legal and social roles in the society.

The study will be of great relevance to students, potentials researchers as well as existing body of

knowledge.

1.7 Scope of the Study

The study focused on the social responsibility of the Nigerian banking sector to the wellbeing of

the Nigeria economy using united bank of Africa (UBA) as a case study.

The research also examined the effect and contribution of this bank on its environment by taking

into consideration its freewill services. It also discussed in detail what social responsibility is all

about, it application and the identification of stakeholders to whom the bank is responsible.

1.8 Limitations of the Study

In the course of carrying out this study, the researcher experience both financial and time

constraints. These serve as the limiting as the limiting factors and invariably affected the scope

of the study.

The financial constraint was as a result of the inability to visit the Corporate Head Office of the

bank to get several annual details of their corporate social responsibilities. Moreover, time

constraint affected the scope.

1.9 Operational Definition of Terms

Corporate Social Responsibility: The continuing commitment by businesses behaving ethically

and contributing to economic development while improving the quality of life of the workforce

and their families, as well as the local community and society (Shehu 2004)

Bank: An establishment authorized by a government to accept deposits, pay interest, clear

checks, make loans, act as an intermediary in financial transactions, and provide other financial
services to its customers.()

Profitability: This is the potential of a project of an organization to make profit. Measures of

profitability includes, returns on capital employed (ROCE), positive and cash flows and the ratio

of net profit etc (Ahmad, 2010)

Economic Growth: Economic growth is an increase in the capacity of an economy to produce

goods and services, compared from one period of time to another. It can be measured in nominal

or real terms, the latter of which is adjusted for inflation. Traditionally, aggregate economic

growth is measured in terms of gross national product (GNP) or gross domestic product (GDP),

although alternative metrics are sometimes used.

Stakeholder; Individuals or groups who have a vested interest or stake in an organization,

including employees, consumers, suppliers, and the local community (Ahmad, 2010)

Social Audit: This provides concise and clear information on performance against social

objectives which can complement an organizaiton’s annual financial audit. It is the review of an

organizaiton’s operations and processes for the purpose of assessing its effect on the

environment.
 CHAPTER TWO
REVIEW OF RELATED LITERATURE
2.1 Conceptual Framework
The pervasive influence of business organization on the society makes the issues of social
responsibility very important. No business venture will survive if it fails to contribute to the
needs of the society in which it is located. Social responsibility is the obligation of managers to
pursue those policies or make decision or to follow those lines of action which are desirable in
terms of objectives and values of the society (Umar, 2009).
Corporate social responsibility provides a good reputation for businesses, better financial
performance, promotion of ethical values, employee rights, human rights. Social responsibilities
is the process whereby organization of any size or sector accounts for their social, environmental
and economic impact. External social responsibilities seek to demonstrate how the reporting
organization integrates with the society and system within which it operates. Internal social
responsibilities seek to provide information to help an organization’s managers operate in a more
socially sustainable manner.
The backbone of social responsibility is the explicit recognition that every organization has a
wide range of stakeholders, that is, those who are influenced by and in turn influenced the
organization. In addition to stakeholders and other financial participants, most of the
stakeholders are usually taken to be the employee, the local community, suppliers, customers and
government. Each of these stakeholders has right to, among other things information about the
activities of the organization (Gray and Babington, 2000).
Social responsibility can be defined as a group of activities concerned with the measurement and
analysis of social performance of business organization and their role in maintaining the
environment and providing different services to their local communities directly or indirectly and
reporting such results so that the community is able to evaluate the social performance of that
organization. Through these activities, the organization communicates relevant information to
the targeted groups; since the job of organization is not limited only to the maximization of profit
and economic returns but rather, includes all environmental aspects and community service
(Muhammcd and Jamal, 2008).
The concept of corporate social responsibility has acquired broad support in various international

study, corporate responsibility can be used interchangeably with corporate social responsibility.

While there is no universal accepted definition of. the concept, there is however a consensus that

it implies a demonstration of certain responsible behavior on the part of government and the

business sector toward society and the environment. Three important international institutions

have underlined the need for government and organizations to adhere to the principle of

corporate social responsibility. These are World Business Council for sustainable Development

(WBCSD) and the Dow Jones Sustainability Group Indexes (DJSGI). We will review their

policies and guidelines representing a global consensus on the