Corporate social responsibility, anti-corruption, and financial performance based on the camels framework by the Nigerian listed financial institutions

Despite the stakeholder and legitimacy theories that support corporate social responsibility initiatives by companies, Nigerian financial institutions (NFIs) encounter financial challenges attributed to inadequate corporate social responsibility practices (CSRP). Thus, this study examines CSRP trends among the Nigerian listed financial institutions (NLFIs) and their relationship with financial performance across five (5) dimensions: environmental practice (EP), human resource practice (HRP), product quality practice (PQP), community involvement practice (CIP), and anticorruption practice (ACP), using the CAMELS framework. The study used 7 years panel regression to analyze data from 2012 to 2018 across 37 NLFIs on the Nigerian Stock Exchange. The study applied the System Generalized Method of Moments to control for endogeneity and heteroskedasticity. Findings of the study show an increase in the NLFIs’ engagement in CSRP, ACP and EP. The engagement is low in HRP, PQP and CIP. The NLFIs' CSRP also enhances financial performance. Similarly, the NLFIs' EP, CIP and ACP enhance financial performance. The risk associated with the capital adequacy of the NLFIs is further mitigated by CSRP, EP, CIP and ACP. Conversely, EP, PQP and ACP mitigate the risk associated with asset quality. The risk that is associated with liquidity of the NLFIs is mitigated only via ACP. In contrast, their sensitivity to market risk is mitigated by CSRP, HRP, PQP, CIP and ACP. Further analysis also shows that the EP of the NLFIs enhances management quality, while CIP and ACP improve earnings quality. The study enriches the CSRP literature by incorporating the CAMELS framework in the CSRP studies within the financial industry. The study also provides guidance to policymakers and practitioners regarding the effects of CSRP and its dimensions on financial performance and risk of the NLFIs