Corperate Social Responsibility in Banking Institutions Finance Essay

The field of corporate social responsibility has grown considerably making waves over the last decade. CSR itself is a multifaceted, complex phenomenon emerging as the line between businesses and society. A lot of businesses more than previously are becoming more active in contributing to society and this add to the financial decisions that are taken by these institutions. Social and environmental consequences have started affecting the financial decisions of many companies and are being weighed against economic gains and short-term profit against long-term prosperity by the businesses in order to maintain long-term sustainable growth and development.

Corporate Social Responsibility (CSR) issues are integrated in all aspects of business operations and explicit commitment to CSR is made in the vision, mission and value statements of most companies. CSR reports issued usually go beyond profit maximization to include companies and the environment.

With regards to Ghana particularly, Ofori (2007) recognised that Ghanaian managers believe that operating in a community involves supporting the community through social programmes, beyond corporate philanthropy, to strategic actions that respond to the different needs of the communities in which businesses operate. Ghanaian managers seem to have positive attitudes toward CSR and these attitudes are largely influenced by both individual and societal ethical values.

However, in a general sense, CSR is about the relationship of corporations with society as a whole, and the need for corporations to align their values with societal expectations (Atuguba and Dowuona-Hammond, 2006).

Financial institutions, such as banks, do not produce hazardous chemicals or discharge toxic pollutants into the air, land or water and thus apparently they might be viewed as uninvolved with environmental issues (Cowton and Thompson, 2000). But through their financing practices they are supporting commercial activity that ultimately degrades the natural environment by (Smith, 1993). Sarokin and Schulkin, 1991 also believe that they act as facilitators by supplying the fund to support the production process which ultimately causes environmental degradation. Thus banks should admit the responsibility of indirect involvement in environmental damages and recognize their environmental responsibility, which is a part of their CSR, to strike a balance between economic and social goals to encourage the efficient use of resources. It is not just philanthropy and obeying the laws, rather an attempt to ensure their own sustainability and profitability (Wanless D, 1995).

According to the classical capitalist theory, the primary managerial obligation is to maximize shareholders' profit and it's long term interest is not for a company to contribute to the society in which it operate since it contradicts the profit maximization theory. Friedman (1970) argues that "in a free society, there is only one social responsibility of business, to utilize its resources and take on activities desired to increase profit so long as it stays within the set laws, which is to say it engages in open and free competition without dishonesty or fraud". However businesses are being encouraged to follow the traditional utilitarian focus on profits and give back to society. Additionally, businesses are being held accountable by all aspects of society on their social and environmental performances.

The need for companies to undertake activities that might be considered as socially responsible has been a subject matter of academic study for decades. Cannon T. (1992) discuses the development of business involvement leading to post war reassessment of the nature of the relationship between society, business and government. He identifies the primary role of business in producing goods and services that society wants and needs. This traditional contract between business and society has changed over the years because of the addition of new social value responsibilities placed up on businesses. Some of these new social value responsibilities include: stricter compliance with local, state, federal, and international laws; social problems; human values; healthcare; pollution; quality of life; equal employment opportunities; sexual harassment; elimination of poverty; child care and elderly care; support of the arts and universities; and many others. Basically, each of these areas of social value responsibility can be placed in one or more of three broader categories or headings of social responsiveness, namely legal, moral ethical, and philanthropic.. In the same way, Wood D. J. (1991) states that "the basic idea of Corporate Social Responsibility is with the intention that, business and society is interwoven rather than distinct entities".

A socially responsible business is one that takes steps to adopt business practices and policies that goes beyond minimum legal requirements and contributes to the welfare of its key stakeholders. A company that adopts CSR therefore formulates a comprehensive set of policies, practice and programs that are integrated into the business operation and decision making processes throughout the company. The key dimensions of CSR are customers, employees, business partners, communities and investors. CSR is therefore how to manage these responsibilities.

Each company responds in its own unique way to CSR issues. The degree and extent of their response is influenced by factors such as a specific company's size, the particular industry, the firm's business culture, stakeholder demands and how historically progressive the company is and engaging in CSR. While some companies focus on single areas like the environment, others aim to integrate CSR in all aspects of their operations. However, for proper implementation, it should be aligned with the company's specific corporate objectives and core competencies.

Most studies have shown that most companies do not partake in CSR but little had been done on the reasons why they do not partake in them. Similarly, no work had been done to evaluate the relationship that exists between Corporate Social Responsibility and the impact it has on Financial Performance if any.

1.3 RESEARCH QUESTIONS

According to Punch (1998), research questions are important as they could help delineate the boundary of the research, hence ensuring constant focus on the topic under investigation. Research questions and research objectives are complementary to each other, as it is through answering the research questions that the objectives of the research will be met. Research questions and research objectives, therefore, should be read together as the former will lead to the latter. With that explanation, the research questions for this study are as follows: The questions of the research are:

What are the factors that influence a firm's decision to undertake CSR?

What determine whether there is a relationship between CSR and Financial Performance?

1.6 SCOPE OF THE STUDY

The study was limited to the Banking institution listed on the Ghana Stock Exchange over a five year period from 2007-2011. The scope was narrowed to the Ghana Stock Exchange because:

Availability of information on listed companies, since certain disclosures are required by law.

It is representative of the major banking institutions

It has stringent criteria, thus, all companies listed are credible.

It is a high performing stock exchange; it ranked first worldwide in 2003.

1.7 LIMITATIONS

The likely limitations this study encountered included the following:

The historically nature of financial accounting information that was used could make the results inaccurate.

Poor questionnaire response on the part the company.

Unavailability of information (financial reports of some of the companies over the five year period).

Generalization problems will or might arise since the banking institutions listed on the exchange market represent just a small percentage of the number of banks in Ghana and hence certain financial institutions might not be represented.

1.8 STRUCTURE OF THE RESEARCH WORK

The organization of the research was in five main chapters. Chapter One: This chapter was intended to introduce the study and try to give an in-depth look at CSR. The problem statement, objectives, methodology as well as the significance of the study will also be incorporated in this section. The chapter provided a total overview and a guide on the structure of the research work. Chapter Two: This chapter brought up the literature review which took a look at the work done by other researchers in this field, their theories and how this study supplemented those findings to help develop a conceptual framework. Chapter three disclosed the methodology of the study. It also considered the various methods that will be employed to collect data and presentation, justification for those methods and data analysis techniques. Chapter Four: This chapter gave an in-depth analysis of the data that was collected. It also interpreted and discussed the findings in line with the objectives of the study. Chapter Five: This chapter summarized the research findings upon which necessary conclusions were drawn as well as recommendations made.

1.9 CONCLUSION OF THE CHAPTER

Chapter 1 has set the context of the research from two broad perspectives - paradigmatic and scholarly stance; and practitioners' points of view. Accordingly, the overriding objectives, scope and limitations of the research were discussed. Having established and justified the foundation and the background of the study, Chapter 2 began a review of the literature in relation to the study's research problems.

CHAPTER TWO

2.0 LITERATURE REVIEW

2.1 Introduction

According to Brown (1996), the essence of literature is to guide the researcher to expose him/her to various works on the topic. The purpose of this chapter is to review the literature on and probably bring out gaps from the view point of previous researchers and practitioners. Various emerging trends in the field of co-operate social responsibility and financial institution in Ghana are delved into, to help identify shortfalls in the literature and direct research efforts, aimed at ensuring effective and efficient adoption of co-operate social responsibility in Ghana.

In the contemporary globally competitive market companies must portray themselves as socially responsible companies. Through globalization companies pursue growth, and active involvement in socially beneficial programs provides competitive advantages to the company in pursuing such goals. Companies operating in multiple nations are often required to play a significant role in social issues of the respective nations, otherwise government regulations, environmental restrictions; labour exploitation issues and more can cost companies millions of dollars. Under these circumstances, Corporate Social Responsibility (CSR) can increase both long term profitability and sustainability of the company as well as enhance the reputation of the organization.

The last three decades have seen a mounting pressure on companies to engage in CSR. Among most global companies, some simply view CSR as a costly hindrance, while a few have managed to use Corporate Social Responsibilities methodologies as a strategic approach to obtain public support for their presence in the global markets.

Nevertheless, this helps the companies to uphold a competitive advantage by using its social contributions. Researchers around the world, over the past few decades, have reported positive, negative, mixed and neutral impact of CSR on Corporate Financial Performance (CFP). Building upon this premise, the objective of this study is to draw a conceptual framework for examining the direction of the linkage between corporate social responsibility and corporate financial performance and apply the framework on the banking sector in Bangladesh in order to examine the impact of CSR on CFP in this sector.

The concept of Corporate Social Responsibility (CSR) in its present form originated in 1950A¢â‚¬Å¸s when Bowen, 1953 wrote on "The Social Responsibilities of a Businessman". He defined CSR as "the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society". (Carroll, 1999). Since then the notion of CSR has come to dominate the society-business interface and many theories and approaches have been proposed. With respect to CSR and firmA¢â‚¬Å¸s financial performance, the literature consists of three principal strands: (i) the existence of a positive correlation between CSR and financial results (ii) the lack of correlation between CSR and financial results; and (iii) the existence of a negative correlation between CSR and financial results. Some proponents of the first strand (Soloman and Hansen, 1985; Pava and Krausz, 1996; Preston and OA¢â‚¬Å¸Bannon, 1997; Griffin and Mahon, 1997) find that investment in Corporate Social Responsibility have a big return in terms of image and overall, financial result; the related benefits, in fact are bigger than the related costs.

Literature reveals the existence of many positive externalities that are linked to CSR in its bid to respond to stakeholdersA¢â‚¬Å¸ requirements. Clarkson, (1995) and Waddock and Graves, (1997) believe that satisfying the interest of stakeholders (shareholders, employees, suppliers, community, environment and so on) and being accountable to them may actually have a positive impact on all firm dimensions, particularly financial performance. Positive reputations have often been linked to positive financial returns.

Roberts and Dowling, (2002); Fombrun, Gardberg and Barnett (2000); Porter and Van Der Linde (1995) and Spicer (1978), posit that CSR initiatives can lead to reputation advantage as improvements in invested trust, new market opportunities and positive reactions of capital market would enhance The idea of the second group of theorists is that there is no relationship between corporate social responsibility and corporate financial performance (McWilliams and Siegel, 2000; Ullmann, 1985; Aupperle, Carrol and Hatfield 1985; Waddock et al., 1997). Waddock et al., (1997) explain that a neutral relation may suggest that many variables in the relation between social and financial performance make the connection coincidental. McWilliams et al., (2000) find that the firms supplying corporate social responsibility products to their own customers have a different demand curve compared to those with no corporate social responsibility. Ullmann (1985) underlines that no clear tendency can be recorded between connections on social information, social performance and economic results. The main reason for this appears to be the theoryA¢â‚¬Å¸s inadequacy, inappropriate keyword definitions and lack of empirical materials. It was observed that important aspects are not just social performance and economic but also "information" about social performance and that only a few studies have analyzed this three-dimensional relation. Other studies highlight corporate social responsibility and performance, both in the short term-on the basis of Abnormal return measure and market actions-and in the long term (Aupperle et al.,1985).

Finally, the idea of that negative relationship exists between CSR and financial performance is focused on empirical studies and contributions that refer to managerial opportunism hypotheses. Preston et al., (1997) point out that manager can reduce investments in corporate social responsibility in order to increase short term profitability (and, in this way, their personal compensation). This point seems to be really interesting, due to the fact that other

authors (Barnea and Rubin, 2006) suggest the existence of an opposite trend linked to the same phenomena (Managerial opportunism).

organisation's financial performance.

Waddock et al., (1997) assumed that companies with responsible behavior may have a competitive disadvantage, since they have unnecessary costs. These cost, fall directly on the bottom line and would necessarily reduce shareholders profits and wealth. Both short term analyses based on measuring abnormal returns (Wright and Ferris, 1997), Market measures and long term studies (Vance, 1975) have negative relationship between performance and corporate social responsibility.

Pragmatic studies of the relationship between Corporate Social Responsibility and financial performance encompass essentially two types. The first uses the event study methodology to assess the short-run financial impact (abnormal returns) when firms engage in either socially responsible or irresponsible acts (Wright et al., 1997; Posnikoff, 1997; McWilliams et al., (1997).

The second type of study examines the relationship between some measure of corporate social performance (CSP) and measures of long term financial performance, by using accounting or financial measures of profitability (Cochran and Wood, 1984; Aupperle et al., 1985; Waddock et al.,1997).

The relationship between corporate social responsibility and corporate financial performance has been studied intensively with mixed results. In a survey of 95 empirical studies conducted between 1972-2001, Margolis et al., (2001), report that: "When treated as an independent variable, corporate social performance is found to have a positive relationship to financial performance in 42 studies (53%), no relationship in 19 studies (24%), a negative relationship in 4 studies (5%), and a mixed relationship in 15 studies (19%)." In general, when the empirical literature assesses the link between social responsibility and financial performance the conclusion is that the evidence is mixed.

Measuring CSR has always been a difficult task as there is little consensus about which measurement instrument to apply. In many cases, subjective indicators are used. Similarly, measuring financial performance is equally difficult as there is little consensus about which measurement instrument to apply.

Many researchers use market measures (Alexander and Buchholz, 1978; Vance, 1975), others put forth accounting measures (Waddock et al., 1997; Cochran et al., 1984) and some adopt both of these (McGuire, Sundgren and Schneeweis, 1988).

These two measures, which represent different perspectives of how to evaluate a firmA¢â‚¬Å¸s financial performance, have different theoretical implications (Hillman and Keim, 2001) and each is subject to particular biases (McGuire et al., 1988). The use of different measures, needless to say, complicates the comparison of the results of different studies (Tsoutsoura, 2004).

In line with previous researches (Brammer, Brooks and Pavelin, 2006; Fiori, et al., 2007), the study adopt the first three measures of social performance: community performance, employee performance (health and safety, training and development, equal opportunities policies, equal opportunity systems, employee relations, systems for job creation and job security) and environmental performance (policies, management systems, and reporting) social measures.

Corporate social responsibility (CSR) is influenced by how businesses align their values and behaviour with the expectations and needs of stakeholders - not just customers and investors, but also employees, suppliers, communities, regulators, special interest groups and society as a whole. CSR describes a company's commitment to be accountable to its stakeholders.

CSR is a growing term that still does not have a standard definition or a fully recognized set of specific criteria. CSR is generally understood to be the way a company attains a balance or integration of economic, environmental, and social imperatives while at the same time addressing shareholder and stakeholder expectations, with the understanding that businesses play a key role on job and wealth creation in society. Corporate social responsibility (CSR) has become a prominent topic in the both business and academic press.

Nevertheless, opinions differ as to whether a firm's CSR activity provides any economic benefits. According to Frankental (2001) "CSR is a vague and intangible term which can mean anything to anybody, and therefore is effective without meaning." On the other hand, The Commission for the European Communities (2001) defines CSR as "a concept whereby companies integrate social and environmental concerns in the business operations and in their interactions with their stakeholders on a voluntary basis". According to Wood (1991), "the basic idea of CSR is that business and society are interwoven rather than distinct entities" and for Mallenbaker (2006), "CSR is about how companies manage the business process to produce an overall positive impact on society". More generally, a distinction has been drawn between CSR seen as philanthropy as opposed to CSR as a core business activity (Jones et al., 2007).

Carroll (1979) observed that "the social responsibility of business encompasses the economic, legal, ethical, and discretionary expectations that society has of organizations at a given point in time".

2.2 Corperate Social Responsibility In Banking Institutions

(Cowton and Thompson, 2000).stated that Financial institutions, such as banks, do not generate hazardous chemicals or discharge toxic pollutants into the air, land or water and thus apparently they might be viewed as uninvolved with environmental issues.

But through their financing practices they are supporting commercial activity that ultimately degrades the natural environment (Smith, 1993). (Sarokin and Schulkin, 1991) also emphasised that Banks act as facilitators by supplying the fund to support the production process which eventually causes ecological degradation.

This goes a long way to specify that banks should admit the responsibility of indirect involvement in environmental indemnity and be familiar with their municipal responsibility, which becomes part of its Corporate Social Responsibility. It also strikes a balance between social and economic goals to give confidence and make use of resources. Wanless 1995, affirmed that, it is not just philanthropist act and complying with the laws, rather an attempt to ensure their own sustainability and profitability.

Involvement in environmental degradation will not only invite public criticism and negative customer reaction, but also might make regulations more stringent which can impair the bank profitability by curbing market for the commodities of its customers. Lenders can as well be held

1 For example, the Montreal protocol has banned the production of ozone-depleting substances, which is threatening for companies operating in that area and the banks financed these companies. These Banks should then be responsible for their customers' environmental effects.

2. Thus banks have strong prudential reasons for trying to avoid lending in ways that expose them to environmental risk and have clear incentive to incorporating environmental criteria into the lending decision making process.

In contrast, the status of environmental risk management by banks is not satisfactory in least developed countries like Bangladesh, largely due to inadequate existence and poor enforcement of existing laws and insufficient pressure from concern groups and the general public.

In June 1997, Bangladesh Bank, the Central Bank of the country, asked all commercial banks (BRPD-No-12 dated 8.10.1997) to undertake necessary steps in light of the implementation of certain decisions with regard to environmental conservation and protection of environmental pollution by the National Environment Committee and implement the provisions of the 1995 Act Environment Conservation.

Commercial banks are asked to ensure that steps have been undertaken to control environmental pollution before financing a new project or providing working capital financing to the existing enterprises.

However, enforcements of these have been very weak in the country. Consequentially, environmental protection is not in the priority list of the banks in Bangladesh during lending and in other operations. A lot needs to be changed in terms of policies and mindsets, and in formulation of new and implementations of existing regulations.

2.3 Relationship between Corporate Social Responsibility and Financial Performance

Some school of thought believes that there are two types of empirical studies on the relationship between Corporate Social Responsibility and Corporate financial performance (Clinebell and Clinebell, 1994; Worrell et al., 1991; Posnikoff, 1997; Hannon and Milkovich, 1996; Teoh et al., 1999; Wright and Ferris, 1997).

Some studies uses the event study methodology to assess the short-run financial impact (abnormal returns) when firms engage in socially responsible or irresponsible acts and the results of these studies have been varied.

Teoh et al. (1999) found no relationship between CSR and financial performance, Wright and Ferris (1997) found a negative relationship and Posnikoff (1997) reported a positive relationship; and McWilliams and Siegel (1997) studies are inconsistent on the relationship between CSR and short run financial returns.

Through a broad-based index of corporate social performance, Waddock and Graves (1997) analyses whether there is a positive relationship between corporate social performance and financial performance and whether both be deficient in resource and high-quality management theory may be in force concurrently.

Using the improved measurement version, they found that corporate social performance does depend on financial performance and that the sign of the relationship is positive. Researchers view that, corporate social performance is a kind of virtuous circle, there is a simultaneous relationship, and corporate social performance is both a predictor and consequence of company financial performance.

McWilliams and Siegel (2000), found that, when research and development and industry factors are expelled, the coefficient on corporate social performance thus a measure of corporate social responsibility is confident and statistically important.

Nevertheless, when research and development and industry factors are incorporated, the degrees of the coefficient reduce considerably and are no longer significant. Corporate Social Performance then shows a neutral effect on profitability.

2.4 Measuring Corporate Social Responsibility

For measuring CSR there are two generally accepted methods. The first method is a reputation index, where knowledgeable observers rate firms on the basis of one or more dimensions of social performance.

One reputation index was generated by Moskowitz (1972), who over a period of several years rated a number of firms as outstanding, honorable mention, or worst (Moskowitz, 1972). Content analysis is a second method of measuring CSR.

More often than not, in content analysis the level of reporting of Corporate Social Responsibility activities is in different firm's publications and particularly in their annual reports. Considered by these scholars, Abbott & Monsen, 1979; Bowman and Haire, 1975; Ingram, 1978; Anderson & Frankle, 1980).

2.5 Measuring Financial Performance

General measures of financial performance fall into two broad categories: investor returns and accounting returns. The basic idea of investor returns is that, the return should be measured from the perspective of shareholders.

Whereas, Accounting Return measures of financial performance focuses on how firm earnings respond to different managerial policies.

Cowton and Thompson, (2000) looked at the Fleet Factors case of U.S.A., a lender was held liable for cleanup costs at a site owned by a defaulting client since it was adjudged to have been in a position to influence the firm's business choice. Market performance measures by risk-adjusted return, or alpha, and total return are used by McGuire et al. (1988) as instrument of corporate financial performance.

Accounting-based performance measures are return on assets (ROA), total assets, sales growth, asset growth, and operating income growth. The ratio of debt to assets, operating leverage, and the standard deviation of operating income were other accounting-based measures of risk.

Waddock and Graves (1997) measured financial performance using three accounting variables: return on assets, return on equity, and return on sales, providing a range of measures used to assess corporate financial performance by the investment community. Earnings per share (EPS) or price/earnings (P/E) ratios are used in some studies as the most common measure of accounting returns (Bragdon and Marlin 1972).

On the other hand, Cochran and Wood (1984), used three account returns measures: the ratio of operating earnings to assets, the ratio of operating earnings to sales, and excess market valuation.

In addition to this, three other measures of financial performance are used by researchers: market-to-book ratio; accounting profit ratio (return on assets, return on equity, return on investment, and return on sales) and stock market returns.

2.6 Conclusion

The researcher has conducted a comprehensive literature review on both direction of relationship between CSR and Corporate Financial Performance, and ways to measure them. The result of this review might be concluded in the following manner, and by drawing a conceptual framework as;

Various empirical studies around the world have reported a positive, negative, mixed and neutral impact of corporate social responsibility (CSR) on corporate financial performance (CFP). Hence rather than having any preconceived idea on the direction of the relationship, there needs to be an open view on this: the linkage between CSR and Corporate Financial Performance (CFP) will depend on various factors, e.g., industry, location, size etc. Among the two common methods of measuring CSR, to the researcher is going to use a reputation index to measure the Corporate Social Performance in Bangladesh. It may be noted that there are no published source of knowledgeable observer rating of social performance. The researcher will have to develop a questionnaire and ask the knowledgeable observer to rate the firm on five dimensions of social performance.

CHAPTER THREE

3.0 METHODOLOGY

3.1 INTRODUCTION

Methodology is one of the most important elements in any research. Research methodology refers to the various steps adopted by a researcher in studying an issue or a problem with certain object in view. According to Blaxter "All research involves the collection and analysis of data, whether through reading, observation, measurement, asking questions or combination of these or other strategies" (Blaxter et al, 2002, p153). This chapter provided the scope, research questions, target population and sample, research approach, data collection and analysis procedures as well as the limitations of the research. This chapter dealt with:

3.2 The Research Design

The study adopted both the quantitative and the qualitative research methods for the study to enable the researcher provide a narrative description of events as they unfold, and also, to present data in descriptive form. The researcher considered these methods appropriate in other to facilitate the collection of field data through observation and the analysis of descriptive data thus employing qualitative methods. A total of 21 days was spent in interviewing the various subjects and, also, observing trends of events as they unfolded in each of the bank. Data were collected in the form of tables (i.e. by way of percentages), Mathematical derivatives by way of linear equation and mathematical calculus were used in addition to the qualitative method if found prudence, Charts in the form of Pie charts, and in words through interview with key informants, and the review of documented materials. Direct observation and unstructured conversations were also employed in collecting data from the respondents.

Since the study sought to investigate GCB's corporate social responsibility with regards to certain branches in its natural setting, and to provide information on its financial and economic significance, this approach was found appropriate. In order to achieve clarity of interpretation of data attempt was made in the report at reducing portions of the data collected to numerical symbols while other aspects were been described as they were observed or told.

3.3 Qualitative Research Method

Best and Khan (1998) have explained that qualitative studies are those in which the description of observations is not ordinarily expressed in quantitative terms. It is not that numerical measures are never used but that other means of description are emphasized.

This means that when the researcher gathers data by participant observation, interviews, and the examination of documentary materials, little measurement may be involved. In other words, the number of times an event occurs could be counted and the result presented in a tabular format. As such, observations were classified into discrete categories, yielding nominal level data. According to them, the three most used research instruments in qualitative research are in-depth interviews, observation, and document analysis. They asserted that, although some qualitative research includes limited quantification such as counting the number of occurrences of an event, in general, qualitative research interprets data without numerical analysis. Best and Khan cited Patton who stated that qualitative methods consist of three kinds of data collection: The in-depth, open-ended interviews; direct observation; and written documents. According to Patton, the data from interviews consist of direct quotations from people about their experiences, opinions, feelings, and knowledge. The data from observations consist of detailed descriptions of people's activities, action, and the full range of interpersonal interactions and organizational processes that are part of observable human experience.

Document analysis in qualitative inquiry yields excerpts, quotations, or entire passages from organizational clinical or programme records; memoranda and correspondence; official publications and reports; personal diaries; and open-ended written responses to questionnaires and surveys.

3.4 The Quantitative Research Method

Saunders, Lewis and Thornhill (1997), hold the view that quantitative data in a raw form convey little meaning to most people until such data are processed and analysed into meaningful information. According to them, quantitative analyses techniques such as graphs, charts, tables and statistics allow us to explore, present, describe and examine relationships and trends within the data. This implies that quantifiable data are those whose values are measured numerically as quantities. This means that quantitative method allows us to present data in a more precise format than categorical as each data value can be assigned a position on a numerical scale which allows the researcher to analyse data using a far wider range of statistics. In effect, the use of both the qualitative and the quantitative research methods as triangulation enhanced the analysis and presentation of the research data in a clear and concise manner.

3.4 Interview

Some data were gathered through direct verbal interaction among individual bank officials According to Cohen and Marion (1994) the advantage of collecting data through the direct interaction form of interview is that it allows the researcher to have in-depth information than is the case with other methods of data collection. However, the researcher took cognizance of the fact that this form of interview also has a disadvantage in that it could be prone to subjectivity and bias on the part of the interviewer.

Though unstructured, the researcher carefully planned the questions to ensure, as much as possible, that relevant information was obtained from the respondents. Part of the interviews conducted with the informants in Kumasi took place at the central market, offices and around the various bank premises. In some cases, the researcher interviewed the informants simultaneously in a focus group. This approach was chosen because the researcher realized that interaction among certain group of informants was more informative than individual conducted interviews. Also, the participants felt comfortable providing information in a group than alone. The informants consisted of traders, officials of the various banks, civil servants and public servants who transact various businesses within the Kumasi Metropolis.

The researcher also made efforts to contact individuals who are experts in the banking and financial sector that were mentioned in the course of the interview. These include senior bank officials and renowned resource persons. The purpose of interviewing the various categories of subjects was to find out what they think or how they feel about Branch Networking and Deposit Mobilisation as provided by the Ghana Commercial Bank. This was to enable the researcher find out those things he could not directly observe. This was done informally in casual conversations. The interview did not involve any specific type or sequence of questions or any particular form of questioning. The primary intent of the interview, however, was to find out what the branch banks and their valued customers think and then compare the views of one individual client or institution with those of others.

3.6 Target Population

The population for the study consisted of local traders, office workers, bank officials and international business men and women. These were individuals who have one or more characteristics in common that were of interest to the researcher (Best, 1998). The population consisted of 10 informants from 5 communities.

However, only 30 per cent of the entire population was sampled. The criteria for the selection of the sample for observation and analysis were: They were active and retired persons who had transactions with GCB; they were part of the business community who engaged in deposit mobilization or engaged in promoting the activities of GCB in one way or the other.

3.7 Sampling

Best and Khan (1998) pointed out that "Sampling, a deliberate rather than haphazard method of selecting subjects for observation, enables the scientist to infer conclusions about a population of interest from the observed characteristics of a relatively small number of cases." This implies that the population of interest may be large such that the researcher will not be able to interview or observe the individual subjects. This calls for objectivity on the part of the researcher and the need for him to carefully select subjects that will provide him with accurate and relevant information that will enable him to infer accurate conclusions about the population (p. 25).

3.8 Sampling Techniques

Though the simple random sampling technique and the systematic sampling technique were used in selecting the subjects for the study, the simple random sampling technique was adopted because it allowed the researcher to obtain a fair selection of each member of the population for interview and observation. In this case, members of each category of customers or subjects were given an equal chance during the interview. With regards to documentary analysis, the systematic sampling technique was used. This involved selecting sample documents systematically at regular intervals from the sampling frame. A total of 50 documented materials were examined.

However, a sample size of 50% (25 documents) was used. For the purpose of selecting documents at regular intervals, a sampling fraction of 1/2 was employed to select the samples at a regular interval of every 2nd item.

3.9 Observation

Best and Khan (1998) stated that "When observation is used in qualitative research, it usually consists of detailed notation of behaviours, events, and the contexts surrounding the events and behaviours" (253). In terms of observation, Franklen (2000) identified four different roles that a researcher can take: A researcher as complete participant, a researcher as participant-as-observer, a researcher as observer as-participant and a researcher as complete observer.

According to him, when a researcher takes on the role of a complete participant in a group, his identity is not known to any of the individuals being observed. The researcher interacts with members of the group as naturally as possible, and for all intents and purposes. On the other hand, when a researcher chooses the role of participant-as-observer, he does not only participate fully in the activities in the group being studied, but also he makes it clear that he is doing research.

Alternatively, the researcher may choose the role of observer-as-participant; in this case, the researcher identifies himself or herself straight off as a researcher, but makes no pretence of actually being a member of the group he or she is observing. In a situation where the researcher serves as a complete observer, he or she observes the activities of a group without, in any way, becoming a participant in those activities. This means that the subjects that the researcher is observing may or may not realize they are being observed.

For the purpose of the study the researcher adopted the observer-as-participant technique. This implies that the researcher only observed how both the GCB and its clients transacted business as it unfolded in its natural settings without taking part in it. The researcher therefore carried out direct observation of transactions at the various branches.

This approach was adapted to enable the researcher perceive, appreciate and document the salient features of the entire networking and deposit mobilization processes based on technical implications and its physical characteristics. Thus, the study focused on branch banks in terms of their operations, category of customers, type of deposit mobilization, effectiveness and efficiency of networking systems, and technical know-how for running the system. (Cohen, and Marion, 1994).

3.10 Field Data

To gain access to the site, the researcher went through gatekeepers using the principle of informed consent. Cohen and Marion (1994) are of the view that much social research necessitates obtaining the consent and cooperation of subjects who are to assist in investigations and of significant others in the institutions or organizations providing the research facilities.

According to them the principle of informed consent arises from the subjects' right to freedom and self-determination. They cited Diener and Crandell (1978) who defined:"informed consent" as the procedures in which individuals choose whether to participate in an investigation after being informed of facts that would likely influences their decisions.

This approach was adopted to enable the researcher gain access and acceptance to the area where the research was to be conducted and acceptance by those whose permission was needed before embarking on the research. This was done at the early stages in writing to formally inform the subjects.

According to Cohen and Marion, informed consent involves three elements: Competence, Voluntarism, and Full information.

Competence - Competence in this context implies that responsible, mature individuals will make correct decisions if they are given the relevant information.

Voluntarism - Voluntarism entails applying the principle of informed consent and thus ensuring that participants freely choose to take part (or not) in the research voluntarily.

Full information - Full information in this sense implies that the consent of subjects is fully informed, though in practice it is often impossible for researchers to inform subjects on everything. Thus, prior to conducting the field research the researcher sought the consent of branch managers of institutions involved, Board of directors, heads of associations and other associated groups.

The researcher first of all, wrote letters to inform the various bank institutions of his intents to conduct research among their clients and within their banking premises. He also kept in touch with them via the telephone.

Finally, he went and met with the various branch executive members in person to ensure that their consent was really granted.

Though the study focused on the activities of branch banks of GCB other financial institutions were also contacted for additional information. A total of forty two days were used to conduct the study in Kumasi in the months of June, July and August 2012.

3.11 Questionnaire Design

For effective inquiry towards the collection of data from experts and other stakeholders at the the institution, the researcher constructed a five page formal questionnaire which was used to elicit relevant information from the population of study. The questionnaire comprised 18 questions in all to collect data from senior Bank officials and 7 from customers.

3.12 Collection of Primary/Secondary Data

The Primary data were collected from stakeholders through personal informal interviews, and on-the-spot observation. The Secondary data were also collected from documentary sources such as journals, financial reports, published and unpublished financial reports from the officials of Ghana Commercial Bank both in Kumasi and Accra.

3.13 Profile of the Organisation

Ghana Commercial Bank in Perspective

Ghana Commercial Bank Limited, formerly Bank of Gold Coast was established in 1953 and charged with the provision of banking services to the emerging nation for socio - economic development. In particular the bank was to pay special attention to the requirement of Ghanaian traders, businessmen and farmers who hitherto lacked the needed financial support from the then expatriate banks. In addition the bank was to function as a Central Bank. Upon Ghana's attainment of independence in 1957, the Bank of Ghana (BOG) was established to be responsible for the Central Bank needs of the country. The Bank of Gold Coast was then renamed Ghana Commercial Bank to focus mainly on commercial banking services.

Ghana commercial Bank which was wholly owned by the Government of Ghana has grown remarkably to become the largest commercial bank in Ghana with a network of 133 branches and a subsidiary Development Finance and Holdings Limited. The extensive and well positioned branch network coupled with the competitively priced products established the bank as one of the market leaders in terms of Assets, Deposits and Business size. The situation remained so until the last few years.

Bank Growth and Branches

As the economy of Ghana developed, it became necessary to establish more branches to facilitate the opening up of the economy. Therefore in 1959, the bank opened a branch in London to cater for overseas transactions since the London branch was however to be taken over by the Government before the divestiture of the bank. This was because the British government argued that the license which established the bank was a sovereign one between the Ghana government and the British government and, as such, was not subject to divestiture.

The British Government therefore offered to take back the license if the Ghana Government was not prepared to utilize it anymore. The Bank of Ghana subsequently took over the ownership of the London branch. Presently, the Bank of Ghana, Ghana Commercial Bank, Agricultural Development Bank, State Insurance Company and Social Security and Insurance Trust (SSNIT) are the shareholders. In 1961, the Bank of Ghana introduced a code of banking regulations that governed the conduct of foreign trade in Ghana under the Exchange Control Act, 1961. The Act empowered Banks including GCB to be authorized dealers in gold and external currency. GCB was therefore empowered to hold external currency through its subsidiary in London.

The bank also opened a Lome subsidiary in 1971. The Lome subsidiary was expected to facilitate intra-African trade and economic co-operation. However, the Lome subsidiary had to be liquidated during the implementation of the Financial Sector Adjustment Programme (FINSAP) due to poor performance and partly as a result of strained relations between the Governments of Ghana and Togo. Currently Ghana Commercial Bank has a network of 133 branches and 10 agencies. It is also worth noting that the bank established a forex bureau during the onset of the FINSAP as a subsidiary to enable it to compete and maintain its customers. The forex bureau was subsequently liquidated as a result of pressures from the central bank. The bank presently has only one subsidiary, the Development Finance and Holdings Limited (DFHL). With development in Information and Communication Technology (ICT) the bank has successfully networked all 133 branches and 10 agencies and installed 50 Automated Teller Machines (ATM's) spread evenly across the entire network of the bank.

Ownership Structure

The ownership structure had been wholly (100%) by Government of Ghana until 1996 when part of the Government ownership was divested under the Financial Sector Adjustment Program (FINSAP) which was an integral part of the Economic Recovery Programme (ERP) and Structural Adjustment Programme (SAP). Under the divestiture, thirty percent (30%) of the shares were put on the Ghana Stock Exchange to the public and a further thirty percent was earmarked for a strategic investor. The initial share offer was oversubscribed.

The current shareholding structure of the bank is as follows:

Government of Ghana - 34.31%

Social Security and Nat. Insurance Trust (SSNIT) - 30.02%

Daniel Ofori - 6.26%

BBGN Sundry Investments - 1.87%

GCB Staff Provident Fund - 0.92%

Sundry Ghanaian Public - 26.62%

TOTAL - 100%

Source: Ghana Commercial Bank Annual Report 2008

The shares of the bank have since been trading on the Ghana Stock Exchange. This phenomenon transformed the bank into a new entity and with a name known as Ghana Commercial Bank Limited and with a new sense of responsibility towards all of its stakeholders.

Services as Rendered by the Bank

Besides the efficient payment and transfer mechanism that it facilitates, the bank also spearheads the development and growth of priority sectors of the economy - Cocoa financing and marketing, crude oil import financing, road and infrastructure construction and tourism related projects. It has also engaged in financing timber processing for export to name only a few. Added to the bank's lending to agricultural sector, is her involvement in the administration of Private Enterprise and Export Development Project for the promotion of non-traditional exports.

Product line and Product Mix

The operations of the bank as defined by the Bank of Gold Coast Ordinance of 1952, amended in 1957 and further amended under Ghana Commercial Bank Decree (NLCD 115), PNDC LAW 225 (1989) authorized the bank to carry on the business of banking in all aspects provided that it shall not at any one time in any manner or at any place do any act or thing in contravention of the provisions of the Banking Law (1989) PNDCL225 or any other statutory re-enactment thereof for the time being in force. The banks products can be grouped under 3 main headings:

Domestic Retail Banking Services

Under this category of services are:

a) Current Accounts

b) Savings Accounts including new savings products like the following,

Kudi Nkosuo Account, Save and Prosper Account and Flexsave Account

c) Fixed Deposits

d) Negotiable Certificates of Deposit

e) Registry Service - share issues

f) Account Relationship Services

g) Sale and Purchase of Cedi Travellers Cheques

h) Personal Loan, Personal Credit line, Consumer Credit Scheme

i) Loans and Overdraft Facilities

j) Performance Bonds and Guarantees

k) Doorstep Cash Collection

l) Cocoa Financing

m) Ready cash or Automated Teller Services

Foreign Banking Services

Included in the range of services offered under this category are the following

a) Foreign Cheque purchases (giving instant value) and foreign cheques for collection (giving value only after cheque has been confirmed paid by the paying bank)

b) Foreign Deposit Accounts including Fodem Current Accounts, Fodem Savings Accounts and Fodem Investments

c) Fast International Money Transfer

d) Trade Payments and Financing Involving

i) Documentary Letters of Credit - guaranteed payment for imports and exports

ii) Bills for Collection, sight and Term Bills - instant and time related payment for exports

e) Advance of Prepayment Services for special customers having foreign accounts.

Other Special Services/ Packages

Such special services include the following:

a) Provision of short and medium term loans and advances to the productive sector

b) Provision of Business Advisory Services

c) Provision of term guarantees

d) Foreign line of Credit

e) Consortium financing - Teaming up with other lending institutions to provide lending which is well beyond the capabilities of one individual bank.

Organizational Structure

The bank has a seven tier organizational structure which has at its apex an 11 member Board of Directors. Reporting directly to the Board is the Secretary to the Board and Heads of InspectionInternal Audit. Directly beneath the Board of Directors is the Managing Director who is assisted by two Deputies, one in charge of Finance and Administration and the other in charge of Operations. The Managing Director has a direct overseeing responsibility over the Chief Legal Officer and the General Manager, Risk Management Division.

The above mentioned two Deputy Managing Directors in turn oversee the operations of 12 General Managers. The DMD Operations oversees the General Managers for Systems and Technology, Marketing, Branch Operations, Corporate Banking, International Trade Finance and the Small and Medium Enterprise & Rural banking divisions. The DMD Finance oversees the General Managers for Planning and Research, Accounts, Treasury, Human Resource and Support Services Divisions.

Staffing

The bank started operations in 1953 with an initial staff strength of 27 consisting of two expatriate members who were Managing Director and Manager of the branch respectively. As the business of the bank expanded there arose the need to look for additional staff to augment the staff already engaged. The staff strength eventually peaked at over 6000 personnel in 1990. By 1993 however the staff strength had been reduced through a staff rationalization exercise to 3,789 employees with the current staff strength at 2160

3.14 Chapter Summary

In summary the approach that had been chosen, which is using mixed approach, had met the requirement of the study and get the confidant of the researcher in analyzing the topic issue. In addition, it had improved the researcher knowledge about the current situation of co-operate social responsibilities practice in Ghana and enhanced his ability to carried further research in the future.

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