Corporate Governance, Corporate Social Responsibility and Performance of Commercial Banks in Kenya

Abstract

Corporate governance plays a vital role in influencing firm performance through transparency and disclosure, board structure and effectiveness, shareholder rights and protections, and audit and risk oversight. Effective governance remains a persistent challenge, particularly in environments with diverse stakeholders, managerial complexity, and agency conflicts. This study aimed to assess the association among corporate governance, CSR and performance of commercial banks in Kenya. Precisely, the study sought to establish the mediating role of corporate social responsibility in the association between corporate governance and performance of commercial banks in Kenya. This study was anchored in stewardship and stakeholder theories and the Balanced Scorecard. The study adopted a positivist philosophy with an explanatory research design and a deductive approach. A census survey was conducted targeting all 38 licensed commercial banks in Kenya, focusing on chief executive officers who are familiar with governance practices and performance metrics. Data was collected through structured questionnaires, being the primary data, while sources from audited financial reports of 2024 were secondary data.  The findings provided robust empirical support for stewardship theory, stakeholder theory, and the balanced scorecard framework, affirming that both financial and non-financial metrics are shaped by governance quality and socially responsible conduct. The study concluded that the results are consistent with the balance score card framework, the third objective aligns with stewardship theory, while CSR affirmed the study and also reinforced the strategic utility of the balance score card framework. The study recommended that a proposal be developed to inform and guide regulatory bodies in strengthening the governance framework for commercial banks in Kenya, and to develop training and certification programs for board members, aligning with stewardship theory.  The study contributed theoretically by extending corporate governance theories within a banking context; empirically by applying a full census SEM approach; methodologically by integrating both financial and non – financial metrics; and practically by offering actionable insights for corporate governance reform.