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INTERNATIONAL JOURNAL OF BUSINESS, SOCIAL AND SCIENTIFIC RESEARCH ISSN: 2309-7892 (Online), 2519-5530 (Print), Volume: 6, Issue: 2, Page: 68-73, January - June 2018 Revi ew Paper

CORPORATE SOCIAL RESPONSIBILITY PRACTICES OF COMMERCIAL BANKS IN BANGLADESH *S. Mahmud1, M. J. Uddin2 and M. M. Hassan3 [Citation: S. Mahmud, M. J. Uddin and M. M. Hassan (2018). Corporate social responsibility practices of commercial banks in Bangladesh. Int. J. Bus. Soc. Sci. Res. 6(2): 68-73. Retrieve from] Received Date: 23/01/2018

Acceptance Date: 20/03/18

Published Date: 21/03/2018

Abstract Commercial banks activities have direct impact on the people who forms the part of their clientele base. This paper endeavored to know the approaches and progressions of discharging the corporate social responsibilities (CSR) of the commercial banks in Bangladesh (CBBs). The study also attempted to know the perceptions of stakeholders about the corporate social responsibility practices of commercial banks of Bangladesh with the help of non-parametric Mann-Whitney Test. A survey was conducted during the period of December 2015 to March 2016 to fulfill the objectives. Results showed that the bankers and the clients’ perceptions concerning the social responsibility issues of commercial banks of Bangladesh were not significantly different. The study concludes that corporate social responsibility of Bangladesh commercial bank businesses are progressively changing from the strong economic and legal jurisdiction to the ethical and discretionary features.

Key words: Corporate Social Responsibility (CSR), Social Responsiveness, Commercial Banks. Introduction The ‘social contract’ between the corporation and the community is of critical importance. Many companies are adopting ‘ethical policies’ or ‘codes of conduct’ to perform socially (Thomas 2006 and Drucker 1971). Corporate social responsibility concept was first denoted by Bowen (1953) and achieved dynamism in the benchmark work of Carroll (1979). Corporate social responsibility could also be termed as social responsiveness, social investment, social performance in the commercial bank business areas (Belal 2001). According to Carroll (1979) business corporation simplement civic venture in order to encounter their economic, legal, ethical and philanthropic accountabilities. Carroll (1991) noted that industries were mainly created as economic entities driven by a profit motive. Legal responsibility involves rules and regulations and ethical responsibilities concern about stakeholders moral rights (Miajee 2015). Philanthropic responsibility promotes human welfare and goodwill of the business. Duarte and Rahman (2010) found misconceptions about the notions of CSR and philanthropy in a survey of a heterogeneous group of Bangladeshi managers. They also found that a significant number of managers wanted CSR to be implemented in their own company. Senthil kumar et al., (2011) found that CSR was the most influential factor for the customer satisfaction regarding quality bank service. Yeung (2011) reconnoitered the perception of respondents on CSR and banking exercise and concluded that bank managers should have clear concept about community needs and also perform according to the benefit of customers with sustainable bank profit. Bankers are important stakeholder of bank and banks have direct contact with people and customer in providing their services. Bankers as employee and bank clients as direct beneficiaries with the perceptions, awareness and insights about the CSR activities of their associated banks are very important (Sengh 2007). Commercial banks have many thoughts about CSR framework, but in Bangladesh the working sectors of CSR are limited. Therefore this study was undertaken to fulfill the following objectives: (i) to know the pattern of CSR activities undertaken by CBBs and *Corresponding Author’s email: [email protected] 1 Scientific Officer, Regional Agricultural Research Station, Hathazari, Chittagong 2 Senior Scientific Officer, Regional Agricultural Research Station, Hathazari, Chittagong 3 Agricultural Extension Officer, Ministry of Agriculture, Bangladesh.


CSR of commercial banks in Bangladesh

(ii) to identify the differences if any, between the perception level of bankers’ and people relating to CSR activities. Methodology The survey was done during the month of December 2015 to March 2016. Motijheel bank area of Dhaka, Bangladesh was selected for the survey based on homogeneity nature of bankers and bank clients and availability of resources. Fifty one commercial banks in Bangladesh comprising of nationalized commercial banks, private commercial banks and foreign commercial banks are responding to CSR performance (Bangladesh Bank 2012). Fifteen commercial banks sample were selected for the study. Sample selection was made as per stratified sampling process taking one bank out of three banks in respective. The study based on primary and secondary data. Primary data was collected by face to face interview using questionnaires on five point scale developed by Likert (1932) and secondary data was collected from different secondary sources, i.e., annual report, review of CSR, journal, etc., (Sharma and Mani 2013). First several data of the patterns of CSR activities of CBBs on social responsiveness and social responsibilities were collected and taken into consideration to know the overall situation of CSR of private banks of Bangladesh. Fifty bankers and equal number of beneficiaries or clients responses about overall CSR activities of CBBs were collected and comparative study was done by non-parametric Mann-Whitney (Mann and Whitney 1947) test to assess the relation between people and banker’s perception about selected CSR activities. Hypotheses: Ho: There is no difference between people perception and banker’s perception about overall CSR activities. Ha: There is a difference between people perception and banker’s perception about overall CSR activities. The study compared the mean rank difference in subjective perception scores between the bankers and the people about the selected ten social responsibility activities which the banks were ensuing in addition to their normal operating activities in Bangladesh. Perception scores measurement were designed to include ten important factors namely, increase in expenditure on sports, education, health, green banking, art and culture, farmers welfares, environment, financial inclusion, entrepreneur development and disaster relief. In between group design, as the weighted perception scores of the groups were not related, the grouping variables were identified on the basis of people perception and bankers’ perception with their opinions independently for each aspects separately (Narwal 2007; Fauzi and Raman 2007). Results and Discussion Pattern of CSR activities of CBBs CSR generally discuses about how companies supervise the business to produce positive impact on society. According to Baker (2004), companies should answer two aspects of their operations, i.e., the quality of their management - both in terms of people and processes and the quantity of their impact on society in the various ranges. What is the impact of the products and services of any company on the local communities and environment is very important. There are two different views dominate the thinking of CSR, i.e., the classical or purely economic view and the socio-economic view (Senthi 1979). The classical view pronounces that an organization should be socially responsible but the extent of that responsibility is to maximize profit for the stakeholders. On the other hand, in the socio-economic view social responsibility Fig. 1: How companies manage the goes beyond making profits to include protecting and business processes and overall improving society’s welfare. Because sometimes society impact on society

Mahmud et al.


anticipates business to involve more in social, political and legal issues (Wood 1991). Table 1 showed that the social responsibility requires business to determine what is right or wrong and engage in ethical business activities. A socially responsible organization does what is right because it feels it has a responsibility to act that way. Social obligation is related with certain economic and legal responsibility of business. When a business engages in social action in response to some popular social needs, i.e., art and culture, sponsor it is regarded as social responsiveness activities of the business. Table 1. Corporate Social Responsibility Identification Criteria Identifications Criteria Major consideration Focus Emphasis Decisions

Social Responsibility Ethical End Obligations Long terms

Social Responsiveness Pragmatic Means Responses Medium and short terms

Source: Cochran and Wartick, 1985, p.766. Table 2 broadly classified the CSR activities of CBBs. These activities were addressing different needs of the society i.e. disaster relief, education, health, art & culture, environment, entrepreneur development, sports, financial inclusion, farmers welfare etc. Most of these programs were very successful i.e. education, health, environment, entrepreneur development and financial inclusion. All the banks have undertaken both social responsive (short and medium terms) and socially responsible (long term) activities. About 54 percent activities were social responsive and 46 percent activities were socially responsible activities (Table 2). CSR activities were found on 50 percent rural area, 38 percent urban area and 12 percent remote area (Table 2). Socially responsible activities are mostly rural areas concentrated. According to Rashed (2012), 72 percent people live in village and agriculture sector GDP contributes 19 percent in Bangladesh. Most of the social responsive activities operated in urban areas. Socially responsible activities in remote areas were very negligible. In recent time, some commercial banks have taken different initiatives for increasing remote area social activities i.e. free supply pure water, bio gas plant, and solar energy (Rouf 2011). Table 2.Pattern of CSR activities of Commercial Banks in Bangladesh Name of bank Agrani Bank Ltd. Eastern Bank Ltd. Bank Asia Ltd. Dutch Bangla Bank Ltd. Bangladesh Commerce Bank Ltd. Mercantile Bank Ltd. Dhaka Bank Ltd. BRAC Bank Ltd. Premier Bank Ltd. National Bank Ltd. NCC Bank Ltd. Jamuna Bank Ltd. Pubali Bank Ltd. Al-ArafahIslami Bank Ltd. Standard Chartered Bank Ltd. Total

Total activities (No.) 15 15 14 36 15 20 22 32 20 22 25 20 15 17 25 313

Socially Responsiveness Activities (No.) 8 7 6 15 9 11 12 17 14 15 13 11 9 8 15 170 (54%)

Socially Responsible Activities (No.) 7 8 8 21 6 9 10 15 6 7 12 9 6 9 10 143 (46%)

Investment Area (%)

Rural 50% Urban 38% Remote 12%

Banker’s and bank clients’ perceptions about CSR initiatives of CBBs Segment wise contribution under CSR activities of CBBs showed that the highest 31% was possessed by health sector (Figure 2). Disaster management (20%) was the second influential CSR practice by CBBs. Education being a vital social development point consisted 16% of total CSR activities of CBBs. Banks now a day’s patronage sports and arts quite often. According to Hossain et


CSR of commercial banks in Bangladesh

al., (2005) renewable energy, water and sanitary, beautification, etc. as per the respective bank’s motto were very minute social welfare works done by some CBBs and in this study they were categorized as others (Fig. 2). Bankers’ perception on the importance on the CSR activities of CBBs was shown on table 3. According to bank employees’ perceptions education ranked first as very much important social welfare work followed by humanitarian and disaster relief. Arts and culture ranked last on the least important social obligation of CBBs by the bankers’ perceptions. On the other hand according to the bank clients or beneficiaries, education is the most important CSR activity of CBBs followed by health (Table 4). Most of the CBBs clients referred that farmer’s welfare activity be the least important social responsibilities followed by SME development. It might be because most of CBBs beneficiaries are large to medium business man and not connected to farming practices or small business. Most of the banks which design and implement CSR initiatives in the surrounding area of their works should cover entire community specially farmers and small entrepreneurs. CSR initiatives being implemented by the commercial banks for rural development would have a positive impact in overall development of society (Sarker 2012). According to Hussain and Hussain (2005) many banks are promoting and implementing CSR initiatives through setting up their own foundation or in partnership with non-government organizations. Duch-Bangla Bank Ltd., Jamuna Bank Ltd., Dhaka Bank Ltd., Mercantile Bank Ltd., Eastren Bank Ltd., National Credit and Commerce Banks Ltd. and Pubali Bank Ltd. have established such foundations. A part of their expenditure allocated for CSR is apportioned to such Foundations. Dutch-Bangla Bank Ltd. and BRAC Bank Ltd. have published separate CSR report which clearly speaks of their assuming of higher sense of social responsibility in their corporate action (Islam 2012). 35% 30% 25% 20% 15% 10% 5% 0%

31% 27% 20% 16%



Art and Culture


Disaster management




Fig. 2: Segment wise contribution under CSR activities of CBBs Table 3. Banker’s perception about CSR initiatives by CBBs CSR activities Sports Education Disaster relief SME development Health Environment Art and culture Farmers welfare Green banking Financial inclusion

Not important 0 0 0 5 0 4 6 3 3 2

Less important 10 3 2 10 5 5 11 2 2 3

Important 14 7 8 15 22 11 12 15 15 20

Very important 16 18 20 10 5 12 11 10 15 15

Very much important 10 22 20 10 18 18 10 10 15 10

Rank 4 1 2 6 3 5 10 8 6 9

Mahmud et al.


Table 4. People perception about CSR initiatives CBBs CSR activities Sports Education Disaster relief SME development Health Environment Art and culture Farmers welfare Green banking Financial inclusion

Not important 1 0 0 0 0 4 5 1 0 1

Less important 4 4 4 10 2 0 10 20 5 9

Important 15 6 6 10 8 6 15 9 10 20

Very important 10 10 15 18 10 15 12 10 20 5

Very much important 20 30 25 12 30 25 18 10 15 15

Rank 5 1 3 9 2 4 6 10 8 7

Table 5: Non-Parametric Mann-Whitney Test between people and banker’s perception about selected CSR activities Test statistics a Mann-Whitney U

Score 48.00

Wilcoxon W Z

103.00 -1.510

Asymp. Sig. (2-tailed) P Exact Sig. [2*(1-tailed sig.)] a. Grouping Variable: GROUP b. Not corrected for ties

.880 .912b

Table 6: Mean rank and sum of ranks of people and banker’s perception Group


Mean rank

Sum of Rank



Banker’s perception People perception

10 10

10.70 10.30

107.00 103.00



Result of Hypothesis Testing Table 5 showed the Z statistics significance level for each grouping variables and the number of cases in them and table 6 showed the mean ranks, Sum of ranks, U value and P value for each group separately. Z statistic was non-significant because Asymp. Sig. (2-tailed), i.e., P was much higher than 0.05 (Mann 1945), for the grouping variables namely people perception and bankers perception so there was no significant differences observed in perception score between the respondents about the selected the ten social responsibility issues. Since the significant values for the two grouping variables were higher than the reference alpha level (0.05), so statistical result provide evidence in support of the specified null hypothesis (Milton 1964) and hence we cannot reject the null hypothesis and conclude that the average perception score were not significantly different between the bankers and the people about their perception concerning the selected ten social responsibility issues. Conclusion Corporate Social responsibility is regarded as an important business issue of banking sector of Bangladesh with both ethical and economic significance. The results showed that there is no difference between people perception and banker’s perception about overall CSR activities undertaken by the CBBs. Limitations and Future research prospects This research was focused on a small sample of corporate banks, bankers and clients of Bangladesh. Therefore, the findings of this study may not be generalizable across other developing countries. Therefore, future research should increase the sample size and consider more CSR issues and the applicability of the conceptual framework to other developing countries towards broadening an understanding of CSR in the context of the entire developing world.


CSR of commercial banks in Bangladesh

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