Title: Giving to Lose: the Financial Consequences of Corporate Donations in the Nigerian Banking Industry
Authors: Chiamaka L. Anaike, Gilbert Ogechukwu Nworie, Onyali, Chidiebele Innocent, PhD
Volume: 9
Issue: 10
Pages: 27-36
Publication Date: 2025/10/28
Abstract:
: Corporate donations are generally expected to reflect a bank's commitment to social responsibility while supporting its long-term profitability and stakeholder relationships. However, in the Nigerian banking industry, many institutions allocate substantial funds to charitable causes without clear strategic alignment, measurable impact assessments, or consideration of their financial implications. This uncoordinated approach has created a disconnect between social spending and financial performance, resulting in declining profitability, and inefficient resource utilization. Hence, this study examined the effect of corporate donations on the financial performance of listed commercial banks in Nigeria between 2015 and 2024. The research employed an ex-post facto design using secondary data obtained from the audited annual reports of eleven listed banks. The study tested its hypothesis using the Period Seemingly Unrelated Regression (Period SUR) technique, which corrected for heteroskedasticity and cross-sectional dependence among the banks. Finding revealed that corporate donations exerted a negative and statistically significant effect on bank performance (? = -0.360189, p = 0.0001). The study concluded that although corporate donations are essential for social goodwill, excessive giving may diminish profitability, suggesting that the management of listed Nigerian banks should adopt a more structured and performance-linked framework for corporate donations, ensuring that all philanthropic expenditures are aligned with measurable business objectives and financial sustainability goals. This means that before funds are disbursed for social or charitable purposes, banks should conduct cost-benefit analyses to assess the potential economic and reputational outcomes of such spending.