SOCIAL IMPACT TO FINANCIAL STRATEGY: EXPLORING THE LINK BETWEEN COMMUNITY DEVELOPMENT AND CAPITAL STRUCTURE OF COMMERCIALS BANKS IN NIGERIA
Keywords:
Social Cost, Debt Financing, Firm SizeAbstract
This study investigated the effect of social cost on the capital structure of listed commercial banks in Nigeria, with a focus on debt financing and the moderating role of firm size. Thirteen commercial banks were purposively sampled from a population of 21 banks listed on the Nigerian Exchange Group (NGX). Secondary data covering the period from 2018 to 2023 were collected and analyzed using panel least squares regression to determine the relationship between community development expenditure (social cost), firm size, and debt ratio. The results showed that social cost had a significant negative effect on debt financing, with a coefficient of –0.000795 and a p-value of 0.0133, indicating that increased community development spending slightly reduced banks’ reliance on debt. Additionally, firm size significantly moderated this relationship, as evidenced by the positive interaction coefficient of 0.012423 and a p-value of 0.0118. In conclusion, the study found that social cost influences the capital structure decisions of commercial banks, and that firm size plays an important role in shaping this effect. It recommended that bank management integrate social investments into their financial strategies, while regulators should encourage transparent CSR disclosures to promote sustainable banking practices in Nigeria
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