CORPORATE SOCIAL RESPONSIBILITY AND BANK COST EFFICIENCY IN NIGERIA: STOCHASTIC FRONTIER ANALYSIS

Abstract

This study examines the relationship between corporate social responsibility (CSR) and bank cost efficiency in Nigeria, utilizing Stochastic Frontier Analysis (SFA). The researchers adopted ex-post facto research design. The operating commercial banks in Nigeria as of December 31, 2021, totaling twenty-seven institutions form the population of the study. From this population, a sample of nineteen banks, both with international and national authorizations, is being selected through the use of a purposive sampling technique. Secondary data were used as the sources. The analysis employed a parametric mathematical optimization approach based on Stochastic Frontier Analysis. The analysis states a positive and significant impact of a CSR on bank cost efficiency. Consequently, the study recommends that banks should integrate CSR activities into their business strategies, as these initiatives can enhance the bank's performance, improve its image, reduce risks, and subsequently increase efficiency in their operation.