Corporate Social Responsibility and Profitability Dynamics of Nigerian Deposit Money Banks: Evidence from Panel Data Analysis

This study investigated the effect of corporate social responsibility on the profitability dynamics of listed deposit money banks in Nigeria using panel data covering the period 2016–2025. The increasing emphasis on sustainability reporting, stakeholder accountability, ethical governance, and responsible banking practices has intensified scholarly and policy concerns regarding whether corporate social responsibility initiatives improve corporate financial outcomes within emerging economies. Specifically, the study examined the effect of corporate social responsibility expenditure on return on assets, return on equity, and net profit margin of listed deposit money banks in Nigeria while controlling for firm size and leverage.

The study adopted an ex-post facto research design relying on secondary data obtained from audited annual reports, sustainability reports, and Nigerian Exchange Group disclosures of selected listed deposit money banks. Panel econometric techniques comprising descriptive statistics, correlation analysis, variance inflation factor diagnostics, panel unit root tests, Hausman specification testing, fixed effects estimation, random effects estimation, heteroskedasticity testing, serial correlation diagnostics, and heteroskedasticity-consistent robust regression analysis were employed to ensure reliability and consistency of findings.

The empirical findings revealed that corporate social responsibility exerted a positive and statistically significant effect on return on assets and return on equity, while a moderate positive effect was observed on net profit margin. The findings further indicated that firm size positively influenced profitability outcomes, whereas leverage produced mixed effects across the profitability indicators. The study concluded that strategic corporate social responsibility investment contributes significantly to stakeholder confidence, reputational capital, customer loyalty, operational sustainability, and long-term financial performance among listed deposit money banks in Nigeria.

The study recommended that deposit money banks should institutionalize sustainability-oriented corporate social responsibility frameworks capable of strengthening long-term shareholder value, competitive advantage, and financial resilience. Regulatory authorities should also strengthen sustainability disclosure requirements and monitoring mechanisms within the Nigerian banking industry.