EFFECT OF CORPORATE SOCIAL RESPONSIBILITY ON BANKING SYSTEM STABILITY IN NIGERIA

The study of Corporate Social Responsibility (CSR) is becoming prominent because of its heightened importance as a critical component in strategic business operations. The study examined the effect of Corporate Social Responsibility (CSR) on banking system stability in Nigeria, the efficiency and efforts of Banks’ operations has been questioned owing to the increase of Non-performing loans and the little empirical evidences as to how engagements in Corporate Social Responsibility (CSR) reduces incidences of credit and liquidity risk exposure. A casual research design was applied, and data were collected for 13 Nigerian banks for the scope of 2014-2021. The data was analysed by panel data and we regress social dimension of Corporate Social Responsibility (CSR) against Credit risk, liquidity risk and Return on Assets (ROA) using Multiple Linear Regression (MLR), that is after all the underline assumptions have been duly considered. The results reveals a positive and significant relationship between CSR, banks' liquidity risk (0.044) and ROA (0.008), while a positive but insignificant relationship was obtained between credit risk and CSR (0.514). The finding shows that banks' can reduce incidences of Non-Performing Loans (NPLs) through their Corporate Social Responsibility (CSR) engagements hereby inducing banking system stability. The study contributes to the infancy of empirical evidences on the subject and recommended that banks should ensure they stick to best practices in their overall activities, as credit and liquidity risk exposure are necessitated by the inadequacy in loan disbursement framework, therefore adequate attention needs to be placed on loan disbursements and recovery.