INTERNSHIP REPORT

“Corporate Social Responsibility in the Banks of

Bangladesh in Context of Premier Bank, Bangladesh”

Submitted by
Md. Aminul Islam
ID: 47, Batch- 3rd
Department of International Business
University of Dhaka

Submitted to
Mithun Kumar Acharjee
Lecturer, Department of International Business
University of Dhaka
Corporate Social Responsibility
in the Banks of Bangladesh
in Context of
Premier Bank, Bangladesh

I
 Letter of transmittal

13th May, 2013

Mithun Kumar Acharjee

Lecturer, Department of International Business
University of Dhaka

Subject: Submission of the Internship Report

Dear Sir,
I am here by submitting my internship report on “Corporate Social Responsibility in the
banks of Bangladesh in context of Premier Bank, Bangladesh”. While preparing this report I
worked as an intern for 15 days in Premier Bank., Bangladesh under the supervision of Mr.
Mir Abdur Rahim (Chief Risk Officer Risk Management Division) and Mr. Md. Abdul Hai
(SEVP & CFO Financial Administration Division). This report has helped me to gain both
academic and practical exposure. I have tried to put my sincere effort in taking interview and
studying the related materials, documents, annual reports and compiled them as
comprehensively as possible.
I am grateful to you for your guidance and kind cooperation at every step of my endeavour
on
this report. I shall remain deeply grateful if you kindly take some pen to go through the report
and evaluate my performance

Yours faithfully,

______________________

Md. Aminul Islam

Id-47, Batch-3rd,

Department of International Business,

II
 Letter of Endorsement

The Internship Report entitled “Corporate Social Responsibility in the Banks of Bangladesh

in Context of Premier Bank, Bangladesh”, has been submitted to the department, in partial

fulfilment of the requirements for the degree of Bachelor of Business Administration, Major

in International Business, Faculty of Business Administration on 5th August, 2014 by, Md.

Aminul Islam, ID: 47. The report has been accepted for evaluation.

______________________

Mithun Kumar Acharjee

Lecturer , International Business

University of Dhaka, Bangladesh

III
 Executive Summary
This report is based on “Corporate Social Responsibility in the banks of Bangladesh in
context of Premier Bank, Bangladesh”. This research has tried to find to out CSR activities in
details, various CSR activities, Intensity of various sectors of CSR in CSR Budget and
whether any link exists between Company performances and CSR activities in context of
Premier Bank., Bangladesh. Premier Banks defines CSR in five dimensions – 1. Economic
Responsibility – earn profit for owners. 2. Legal responsibilities to comply with law. 3.
Ethical responsibilities not acting just for profit, doing what is right, just and fair. 4.
Voluntary and philanthropic – promoting human welfare and goodwill. 5. Being a good
corporate citizen. There is no guideline about CSR in Bangladesh, although Bangladesh bank
has handled a two page document about CSR to Banks. Premier bank does not use voluntary
guidelines. So, there is no specified procedure for implementation of CSR. Whenever a
person or entity is in need of money, normal application for aid is submitted by them and then
the application is verified by the personnel responsible for managing CSR. At the end of this
research it was found that there is no significant relationship between “THE PREMIER
BANK LTD’’s Corporate Social Responsibility and Corporate Financial Performance.
There some challenged perceived by Premier Bank of Bangladesh such as lack of
transparency and immoral behaviour of concerned person of CSR ,no specified or detailed
guideline served by Bangladesh Bank ,in some aspects, CSR is practiced as legalized way to
extortion by political parties.

IV
 List of Figures

Figure 3.1 1:Moral Obligation Theory..................................................................................... 18

Figure 3.1 2 :Theories of the Good .......................................................................................... 19

Figure 3.1 3: Theories of the Right .......................................................................................... 20

Figure 3.2 1 Conceptual Framework ....................................................................................... 21

Figure 5.1 1 Economic responsibility ..................................................................................... 24

Figure 5.4 Voluntary and philanthropic ................................................................................... 26

Figure 5.5 SECTOR WISE EXPENDITURE IN LAST FIVE YEAR .................................. 31

Figure 5.6 Investment on Disaster and Relief Sector .............................................................. 32

Figure 5.7 Investment on Education ........................................................................................ 33

Figure 5.8 Investment on Environment .................................................................................. 34

Figure 5.9 Investment on Health and Safety ............................................................................ 35

Figure 5.10 Investment on Social Welfare .............................................................................. 36

Figure 5.11 Investment on Sport ............................................................................................. 37

Figure 5.12 1 CSR Expenditure in 2010 in various Sector ...................................................... 38

Figure 5.12 2 CSR Expenditure in 2011 in various Sector .................................................... 39

Figure 5.12 3 CSR Expenditure in 2012 in various Secto ..................................................... 40

Figure 5.12 4 CSR Expenditure in 2013 in Various Sectors ................................................. 41

Figure 5.13 1 : CSR at Various Categories in Last Four Year ............................................... 42

Figure 5.13 2 CSR at Various Categories in Last Four Years in Line chart............................ 43

V
 List of Tables
Table 3.3 1 Research hypothesis:............................................................................................ 21

Table 5.2 1Conflict with NRB ................................................................................................. 25

Table 5.4 1 Investment on CSR ............................................................................................... 27

Table 5.5 1 CSR expenditure of Premier Bank at a glance ..................................................... 27

Table 5.6 1 Investment on Disaster and Relief Sector ............................................................. 32

Table 6 .7 1 Investment on Education ..................................................................................... 32

Table 5.9 1 Investment on Health and Safety .......................................................................... 35

Table 5.12 2 CSR Expenditure in 2011 in Various Sector ...................................................... 39

Table 5.12 3 :CSR Expenditure in 2012 in various Sector ...................................................... 40

Table 5.12 4 : CSR Expenditure in 2013 in various Sector ..................................................... 41

Table 5.13 1 : Comparative analysis of various sectors in last five years ............................... 42

VI
 Table of Contents

Corporate Social Responsibility ................................................................................................ I

Letter of transmittal................................................................................................................... II

LETTER OF ENDORSEMENT .............................................................................................. III

Executive Summary .................................................................................................................IV

List of Figures ........................................................................................................................... V

List of Tables ...........................................................................................................................VI

Table of Contents ................................................................................................................... VII

Chapter 1: Introduction .............................................................................................................. 1

1.1 Rationale of the Study ...................................................................................................... 1

1.2 Objectives of This Study .................................................................................................. 1

1.3 Scope of the Study............................................................................................................ 1

1.4 Contribution of the Study ................................................................................................. 2

1.5 Limitations of the Study ................................................................................................... 2

Chapter 2: Literature Review ..................................................................................................... 3

2.1 Introduction ...................................................................................................................... 3

2.2 Definitions of CSR ........................................................................................................... 3

3.3 Components of CSR ......................................................................................................... 6

Chapter 3: Theoretical Model and Hypothesis .......................................................................... 9

3.1 Various Theories .............................................................................................................. 9

3.2 Conceptual Framework .................................................................................................. 21

3.3 Research hypothesis: ...................................................................................................... 21

Chapter 4: Methodology .......................................................................................................... 22

4.1 Research design: ............................................................................................................. 22

4.2 Data ................................................................................................................................ 22

4.3 Population and Sample ................................................................................................... 22

VII
 4.4 Reliability, Validity and Generalizability ...................................................................... 22

4.5 Ethical Stance ................................................................................................................. 23

Chapter 5: Analysis, Findings and Discussions ....................................................................... 24

5.1 Economic responsibility ................................................................................................. 24

5.2 Legal responsibility - to comply with the Laws, Rules and Regulations ....................... 25

5.3 Ethical responsibility - not acting just for profit but doing what is right, just and fair .. 26

5.4 Voluntary and philanthropic........................................................................................... 26

5.5 CSR activities of Premier Bank from 2010 to 2013 ...................................................... 27

5.6 Investment on Disaster and Relief Sector ...................................................................... 32

5.7 Investment on Education ................................................................................................ 32

5.8 Investment on Environment ........................................................................................... 33

5.9 Investment on Health and Safety ................................................................................... 35

5.10 Investment on Social Welfare ...................................................................................... 36

5.11 Investment on Sport ..................................................................................................... 37

5.12 Year wise CSR Analysis .............................................................................................. 38

5.13 Comparative analysis of various sectors in last five years ........................................... 42

5.14 Hypothesis Test ............................................................................................................ 43

Chapter 6 : Conclusion and Recommendations ....................................................................... 45

6.1 Conclusion...................................................................................................................... 45

6.2 Recommendations: ......................................................................................................... 45

6.3 Reflection of the Researcher .......................................................................................... 46

References: ............................................................................................................................... 48

Appendices ............................................................................................................................... 52

Data Collection Instrument .................................................................................................. 52

Interview Transcripts: .......................................................................................................... 52

Statistical Output .................................................................................................................. 52

VIII
 Chapter 1: Introduction

1.1 Rationale of the Study

There are lot of reasons and rationale behind the study. Now a day the business world is
greatly influenced by their Corporate Social Responsibilities (CSR). It is also a modern
marketing concept. Here it is very important to study about Corporate Social Responsibility
(CSR) of different company, bank, and financial institution. In this regard as a renowned and
large private online bank of Bangladesh, the study of Corporate Social Responsibility (CSR)
of “THE PREMIER BANK LTD’ is very important. The rationale behind this study is to gain
knowledge about Corporate Social Responsibilities of ‘THE PREMIER BANK LTD’

1.2 Objectives of This Study

The main objectives of this study are as follows:
 To get a broader overview of CSR (Corporate Social Responsibility).
 To identify the CSR activities served by Premier Bank Limited.
 To identify the intensity of various sectors of CSR
 To find out the link between CSR and Companies financial Performance
 To find The link Between CSR and Number of Employees

1.3 Scope of the Study

The Corporate Social Responsibility of “THE PREMIER BANK LTD’ is the scope of this
study. The study covers idea about Corporate Social Responsibility (CSR), various
knowledge and activities of CSR in “THE PREMIER BANK LTD’ .This report does not
generalise the CSR activities of banking industry as a whole

1
 1.4 Contribution of the Study
The outcome of the research will help to understand the important role of (CSR) activities of
“THE PREMIER BANK LTD’. Bangladesh and how it is contributing to the financial
performance and society. This research paper can also be used by other researchers to carry
further studies on (CSR) activities in the future. This will help the researchers to save
precious time during their research. This research paper will also contribute to the limited
amount of research done on CSR in Bangladesh.

1.5 Limitations of the Study

The following limitations are apparent in the report
1. 15 days of internship was not enough for a complex subject like CSR.
2. Lack of adequate primary and secondary data of the subject of the selected bank
3. The officials were unwilling to disclose all data and information regarding CSR for
the reason of confidentiality.
4. The bank’s employees were very much busy in banking hour. So it was very difficult
to have them for equitable long time.
5. Lack of practical experience in the relevant field I faced many problems in
formulizing the data.

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 Chapter 2: Literature Review

2.1 Introduction
There are several reasons this literature review has been conducted. Firstly, It will ensure
me have a thorough understanding of the topic CSR. Secondly it helps me to identify
potential research objectives. Thirdly it gives me knowledge about similar works done
within the area. It helps me Identifying knowledge gaps that demand further investigation. It
works as a platform to compare previous findings and suggest further studies. Corporate
social responsibility (CSR) is also known by a number of other names. These include
corporate responsibility, corporate accountability, corporate ethics, corporate citizenship or
stewardship, responsible entrepreneurship, and ―triple bottom line, to name just a few.
Like various names there are a lot of definitions of CSR .Academicians and corporate
leaders try to define CSR from various dimensions, but fail to deliver a unified definition.

2.2 Definitions of CSR

There are a lot of Definitions regarding CSR in Corporate and academic world. There are
some similarities and dissimilarities on these definitions and Alexander Dahlsrud (2006)
categorised those definition as The environmental dimension, The social dimension, The
economic dimension, The stakeholder dimension and The voluntariness dimension.Some
writers define CSR from all of the perspective mention above .For Example (Commission of
the European Communities, 2001; Business for Social Responsibility, 2000; Global
Corporate Social Responsibility Policies Project, 2003; UK Government, 2001;Van
Marrewijk, 2003) define CSR from all the five dimensions. (Commission of the European
Communities, 2001) defines CSR as “A concept whereby companies integrate social and
environmental concerns in their business operations and in their interaction with their
stakeholders on a voluntary basis”. Like Commission of the European Communities some
other organizations and researchers also take the similar route (Global Corporate Social
Responsibility Policies Project, 2003) defines CSR as ‘Global corporate social responsibility
can be defined as business practices based on ethical values and respect for workers,
communities and the environment’ .(Van Marrewijk, 2003) defines CSR as ‘ In general,
corporate sustainability and CSR refer to company activities voluntary by definition
demonstrating the inclusion of social and environmental concerns in business operations and
in interactions with stakeholders .’(Woodward-Clyde,1999) defined CSR as ‘CSR has been
defined as a ‘contract’ between society and business wherein a community grants a company

3
a license to operate and in return the matter meets certain obligations and behaves in an
acceptable manner’ (UK Government, 2001) defines CSR as ‘corporate social responsibility
recognizes that the private sector's wider commercial interests require it to manage its impact
on society and the environment in the widest sense. This requires it to establish an
appropriate dialogue or partnership with relevant stakeholders, be they employees, customers,
investors, suppliers or communities. CSR goes beyond legal obligations, involving voluntary,
private sector-led engagement, which reflects the priorities and characteristics of each
business as well as sectoral and local factors. ‘From the stakeholder, social, environmental
dimension (Frederick et al. ,1992) defines CSR as ‘Corporate social responsibility can be
defined as a principle stating that corporations should be accountable for the effects of any of
their actions on their community and environment’.(Foran , 2001 ) defined CSR ‘as the set of
practices and behaviours that firms adopt towards their labour force, towards the environment
in which their operations are embedded, towards authority and towards civil society’.
(Andersen,2003) defines ‘corporate social responsibility broadly to be about extending the
immediate interest from oneself to include one's fellow citizens and the society one is living
in and is a part of today, acting with respect for the future generation and
nature’.(Commission of the European Communities , 2001) defines CSR as ‘ Corporate
social responsibility is essentially a concept whereby companies decide voluntarily to
contribute to a better society and a cleaner environment’. From stakeholder, social and
economic dimension (World Business Council for Sustainable Development,1999) defines
CSR as ‘ The commitment of business to contribute to sustainable economic development,
working with employees, their families, the local community and society at large to improve
their quality of life.’ From social, environmental and economic dimensions (Strategies,2003)
defines CSR as ‘ CSR is generally seen as the business contribution to sustainable
development, which has been defined as development that meets the needs of the present
without compromising the ability of future generations to meet their own needs, and is
generally understood as focussing on how to achieve the integration of economic,
environmental and social imperatives’.(Marsden,2001) defines CSR as ‘Corporate social
responsibility (CSR) is about the core behaviour of companies and the responsibility for their
total impact on the societies in which they operate. CSR is not an optional add-on nor is it an
act of philanthropy. A socially responsible corporation is one that runs a profitable business
that takes account of all the positive and negative environmental, social and economic effects
it has on society’. From stakeholder, social, environmental and economic perspective (Van
Marrewijk , 2001) defines CSR as ‘Companies with a CSR strategy integrate social and

4
environmental concerns in their business operations and in their interactions with their
stakeholders and demonstrate openly their triple P performances’. (Lea,2002 ) defines CSR as
‘ CSR can be roughly defined as the integration of social and environmental concerns in
business operations, including dealings with stakeholders’. (IndianNGOs.com ,2003) defines
CSR as ‘Corporate social responsibility is a business process wherein the institution and the
individuals within are sensitive and careful about the direct and indirect effect of their work
on internal and external communities, nature and the outside world.’(Ethical Performance,
2003) defines CSR as ‘At its best, CSR is defined as the responsibility of a company for the
totality of its impact, with a need to embed society’s values into its core operations as well as
into its treatment of its social and physical environment. Responsibility is accepted as
encompassing a spectrum – from the running of a profitable business to the health and safety
of staff and the impact on the societies in which a company operates.’(Ethics in Action
Awards , 2003) defines ‘CSR as CSR is a term describing a company’s obligation to be
accountable to all of its stakeholders in all its operations and activities. Socially responsible
companies consider the full scope of their impact on communities and the environment when
making decisions, balancing the needs of stakeholders with their need to make a profit’.
(Khoury et al., 1999) Corporate social responsibility is the overall relationship of the
corporation with all of its stakeholders. These include customers, employees, communities,
owners/investors, government, suppliers and competitors. Elements of social responsibility
include investment in community outreach, employee relations, creation and maintenance of
employment, environmental stewardship and financial performance. From Voluntariness,
Stakeholder, Social and Environmental dimension (IBLF ,2003) defines CSR as ‘Open and
transparent business practices based on ethical values and respect for employees,
communities and the environment, which will contribute to sustainable business
success’.(Business for Social Responsibility, 2000) defines CSR as ‘ operating a business in a
manner that meets or exceeds the ethical, legal, commercial and public expectations that
society has of business. Social responsibility is a guiding principle for every decision made
and in every area of a business’.(Commission of the Communities,2003 ) defines CSR as
‘CSR is the concept that an enterprise is European accountable for its impact on all relevant
stakeholders. It is the continuing commitment by business to behave fairly and responsibly
and contribute to economic development while improving the quality of life of the work force
and their families as well as of the local community and society at large.’ (CSRwire, 2003)
defines CSR as CSR is defined as the integration of business operations and values, whereby
the interests of all stakeholders including investors, customers, employees and the

5
environment are reflected in the company’s policies and actions.’(Hopkins, 1998 ) defines
CSR as ‘Corporate social responsibility is concerned with treating the stakeholders of the
firm ethically or in a socially responsible manner. Stakeholders exist both within a firm and
outside. Consequently, behaving socially responsibly will increase the human development of
stakeholders both within and outside the corporation.’(Lea, 2002) defines CSR as ‘CSR is
about businesses and other organizations going beyond the legal obligations to manage the
impact they have on the environment and society. In particular, this could include how
organizations interact with their employees, suppliers, customers and the communities in
which they operate, as well as the extent they attempt to protect the environment.’ From the
voluntariness perspective (Kilcullen & Kooistra,1999) defines CSR as ‘CSR is the degree of
moral obligation that may be ascribed to corporations beyond simple obedience to the laws of
the state’. From social perspective (McWilliams & Siegel, 2001) defines CSR as ‘Actions
that appear to further some social good, beyond the interests of the firm and that which is
required by law.’(Jones ,1980 ) defines CSR as ‘the notion that corporations have an
obligation to constituent groups in society other than stockholders and beyond that prescribed
by law or union contract, indicating that a stake may go beyond mere ownership’

3.3 Components of CSR

General Components of CSR are discussed below:
1. Employees
The treatment of employees by large corporations has often come under scrutiny by political
organizations and human rights groups. Particularly in developing countries, where many
resource extraction industries have extensive operations, there are ongoing questions about
just how equitable working conditions and pay levels are. CSR seeks to assist corporations in
treating both domestic and foreign employees equitably by providing safe and comfortable
working conditions and a fair wage. This approach continues the ongoing transformation of a
corporate mentality that was common in the nineteenth century, in which the rights of
employees barely registered among the concerns of company owners.

2. Customers

Corporations have an obligation to provide safe, effective and good-quality products and
services to their customers. A purely free-market analysis of this responsibility would state
that these requirements will be met by the dictates of the market. The philosophy of CSR
questions the truth of this belief, and advocates more proactive intervention into the

6
relationship between corporations and their customers. Consumer protection initiatives, such
as those advocated by Ralph Nader, help to provide the legal backing under which consumers
can challenge what they see as questionable practices on the part of corporations.

3. Environment

Growing public awareness of environmental challenges involving toxins, resource depletion

and climate change is forcing corporations to reconsider the traditional corporate view of the
natural world as an unending cornucopia of resources. Environmental aspects of CSR
encourage corporations to consider the finite nature of the natural world, and to take much
more stringent measures to reduce waste, address polluting or destructive practices and
integrate alternative energy systems and innovative waste-reduction programs. This shift in
attitude is particularly critical in areas of South America and Africa, where corporations have
extensive operations but are not subject to strict oversight and regulation.

4. Society

In addition to their responsibilities to employees, customers and the natural world,

corporations are responsible for their impact on human society. Many millions of people who
are not employed by a corporation and who do not purchase its products are nevertheless
affected by its activities. CSR recognizes the interrelated nature of society, and acknowledges
that no individual or company can exist totally isolated from the rest of society. Therefore,
corporations need to critically analyze what impact their activities have, for good or ill, on
surrounding communities, and take steps to maximize the good and minimize the ill.

Farther additions of component analysis include, Archie. Carroll’s paper “The Pyramid of
Corporate Social Responsibility: Toward the Moral Management of Organizational
Stakeholders” published in Business Horizons, July-August 1991. In that analysis
components or levels of CSR are divided in four –

A. Economic Component
Economic Components of CSR include, maximizing the profit of the company as possible, as
a part of its goal to exist and meet the external and internal shareholders demand. It is
important to be committed to being as profitable as possible and a successful firm be defined
as one that is consistently profitable. The firm must be operated with high level of efficiency
and must in a run to achieve competitive position in the related industry/market.

7
 B. Legal Component
Laws exist within the marketplace, and they govern how corporations are to conduct their
business affairs. Competition with other businesses, regulation of taxes and employment laws
are but a few areas of legal responsibility where corporations are expected to adhere to the
laws. These laws and standards are established nationally and locally.

Organization is in a position to abide both local and other country’s law if operation is
handled there. Local and federal laws must be distinguished in practice. It is important to be a
law-abiding corporate citizen. A successful firm is defined as one that fulfills its legal
obligations and invokes to be good corporate-citizen. It is important to provide goods and
services that at least meet minimal legal requirements.

C. Ethical Component
Organization, as a part of CSR practice should perform in a manner consistent with
expectations of societal mores and ethical norms. It must recognize and respect new or
evolving ethical moral norms adopted by society. It is important for company to prevent,
ethical norms from being compromised in order to achieve corporate goals. It is accept that
good corporate citizenship be defined as doing what is expected morally or ethically. Ethical
practice also includes recognizing that corporate integrity and ethical behavior go beyond
mere compliance with laws and regulations.

D. Philanthropic Component
Corporations are not just economic entities -- they're also considered functioning members of
a society. Firms are to perform in a manner consistent with the philanthropic and charitable
expectations of society. Part of philanthropic efforts also includes assisting the fine and
performing arts. It is important that managers and employees participate in voluntary and
charitable activities within their local communities. Philanthropic effort also means to
provide assistance to private and public educational institutions. It is important to assist
voluntarily those projects that enhance a community’s "quality of life."

8
 Chapter 3: Theoretical Model and Hypothesis
3.1 Various Theories
From study, it is observed that, Corporate Social Responsibility or CSR is an integral part or ‘subset’
of Corporate Governance Practice. Thus, theories of CSR are almost same or overlapped with those of
Corporate Governance.
Here, general and mostly discussed Theories of Corporate Social Responsibility are described

Agency Theory
An agency, in general terms, is the relationship between two parties, where one is a principal
and the other is an agent who represents the principal in transactions with a third party.
Agency relationships occur when the principals hire the agent to perform a service on the
principals' behalf. Principals commonly delegate decision-making authority to the agents.
Agency problems can arise because of inefficiencies and incomplete information. In finance,
two important agency relationships are those between stockholders and managers, and
stockholders and creditors. Agency theory is developed as framework for analyzing
conflicting interests between key stakeholders, in addition to the development of mechanisms
for resolving conflicts (Tipuric, 2008). Besides prevalent contribution within discipline of
corporate governance, agency theory application is extensive: agency theory may be applied
in every situation in which one party (the principal) delegates work to another (the agent),
who performs that work. Agency theory attempts to describe the relationship in terms of
behavioral characteristics and provides mathematic instrument for evaluating situations
between parties who lack mutual trust. Intellectual foundation for agency theory development
was in the work of Coase along with Alchian and Demsetz. Incentive for agency theory
development was relationship between ownership and control function within large
corporations. Pioneers, Jensen and Meckling, tried to verify that corporations do not operate
according to the maximization principle, mainly because of the conflicting interests of major
governing parties (Jensen & Meckling, 1976). Agency theory describes economic exchange
relation between principal and agent. Principal-agent relation, in which principal delegates
work to the agent, is described using the metaphor of a contract (Jensen & Meckling, 1976).
Agency theory objective is to determine optimal contract between principal and agent. Agent
(manager or employee) tries to maximize personal gains by satisfying principal's economic
objectives and agent's commitment level is function of perceived reward value for satisfying
principal's objectives.In situation when principal delegates work to the agent, agency
relationship develops. Agent's mission is to optimally accomplish principal's interests. In

9
pursuit of the mission, the agent chooses way of doing business which results in certain
effects. Principal bears a risk of eventual failure, but also adopts effects of agent's execution
of mission reduced for agreed payment to the agent. Level of reward to the agent usually
depends on principal's interest in realization of the assigned mission. A benefit, to the agent,
in the form of reward represents cost to the principal while agent's effort brings benefits to
the principal (with an assumption that higher effort is directly related to better results), and at
the same time cost to the agent(Eisenhardt,1989).Relationship between principal and agent
based on the contract is a focal point of agency theory. Principal wants to maximize his/her
benefits while minimizing reward to the agent at the same time. On the other hand, the agent
wants to maximize his/her benefits. Agency theory assumes that principal's wealth, per se,
would not be maximized because agent and principal: (1) have different goals, (2) have
different access to information (principal cannot monitor what agent does and know which
information agent has), and (3) different propensity towards risk.

Critics of Agency Theory

(Donaldson, 1990) criticized the agency theory dominance in terms of methodology
individualism, narrow-defined motivation model, regressive simplification, disregarding
other research, ideological framework, organizational economics and corporate governance's
defensiveness. Focus of agency theory's studies is individual consistent with rational,
economic model of human behavior. However, absolute explication of every organizational
activity should not be considered as equivalent to individual activity and that represents
essential critic of structuralism. It is extremely important to stress that Williamson's axiom
about opportunistic agent's behavior over time has gained many different forms and
interpretations. (Williamson ,1985) identified opportunistic behavior of the minority of
individuals, the not majority. "Individual sometimes acts opportunistically and
trustworthiness is hardly ex ante transparent. Therefore, it is compulsory to conduct ex ante
screening and develop ex post assurance mechanisms or, in contrary, opportunistic individual
will exploit circumstances towards less opportunistic individual." Since organizations cannot
completely identify and eliminate opportunism, the fundamental proposition is that
opportunism is possible and therefore control mechanisms are initiated. However, it is
important to stress out that even in circumstances of highly specific assets, where the
probability of opportunism is extremely high, there are individuals who will give priority to
cooperation and trust and will not initiate opportunistic behavior (Hill, 1990).Donaldson
(1990) had an interesting observation that all of organizational economics' academics (Jensen

10
and Meckling, Barney and Ouchi ...) paid no attention to the organizational behavior research
Traditional management theory as well recognizes managerial errors, but not as calculated
actions, but as a result of information insufficiency, knowledge shortage or as a group
thinking effect. Proponents of agency theory state that control mechanisms are obligatory for
directing opportunistic managerial behavior, although empirical researches confirm that
control generates stronger individualistic behavior, reduces proactive organizational behavior
and trustworthiness, and lastly results with distrust (Podrug, 2010). Agency theory is not
normative theory. Agency theory's predictive strength lies in description of the situations
where parties act rationally, focusing on their personal interest, with risk aversion or unbiased
towards risk. Goals' divergences, divergence in attitude towards risk and information
decentralizations are agency theory fundaments. If these assumptions about conflict interests
and information asymmetry are allayed, then agency problem becomes trivial and
scientifically not interesting. In circumstances of equal information approach, principal would
easily define and control agent's behavior and fittingly compensate agent. If principal and
agent have matching interests, then agent's motivation is not unclear (Tipuric,
2008).Analyzing phenomena only within agency theory framework may result in: 1)
disregarding of principal's obligation towards agent; 2) ignoring distrust development and
disrespect of agents; 3) neglecting ethical aspects and 4) overlooking of prospective solutions
consistent with ethical norms. From corporate governance perspective, successful resolution
of agency problem (if possible) significantly reduces potential and validity of agency theory
in analysis of governing relations, leaving opportunity for application of stewardship theory
and other organizational theories. There are a number of limitations of agency theory
(Eisenhardt 1989; Shleifer and Vishny 1997; Daily et al. 2003): Agency theory assumes
complete contracts (i.e. contracts that cater for all possible contingencies such as ambiguities
in language, inadvertence, unforeseen circumstances, disputes, etc). Bounded rationality does
not allow for complete and efficient contracts. Information asymmetries, transaction costs
and fraud are insurmountable obstacles to efficient contracting. Agency theory assumes that
contracting can eliminate agency costs. The many imperfections in the market indicate that
this assumption is not valid. Third party effects are not recognised. Third parties are those
affected by the contract but who are not party to the contract. Many boards are conscious of
third party effects and adopt social as well as financial responsibilities. Thus, whereas
Maximum economic efficiency may (theoretically) be achieved under agency theory, it will
not achieve maximum social welfare. Shareholders are assumed to be only interested in
financial performance. Directors and management are assumed to owe their duty to

11
shareholders. The law requires that duty to be owed to companies. Boards have a number of
roles. Agency theory may be suitable for the monitoring-of-managers role of boards, but it
does not explain the other roles of boards. Agency theory is not informative with respect to
directors resources, services and strategy roles. Much of the corporate governance research is
conceptualised as deterrents to managerial self-interest. Agency theory treats managers as
opportunistic, motivated solely by self-interest. Many would argue that this theory does not
capture those who are loyal to their firms. Agency theory does not take account of
competence. Thus, if even incompetent managers are honest (or are made honest by board
control) they will still be limited in their ability to meet shareholder objectives. It is not
enough to incentivise people to get a task done; they must have the ability to carry out the
task.

Stakeholder Theory
Basically, stakeholder theory is an organizational management theory that complies with
accepted business ethics addressing values and morals in the management of an organization
(Phillips & Freeman, 2003). This theory was emphatically propounded initially by Edward
Freeman in his book, “Strategic Management: A Stakeholder Approach”. He identified the
groups that are considered as stakeholders in any business entity or corporation. He also
described the various models of the groups and presented recommendations to the
management to give adequate regard and respect to the interests of all these groups (Freeman,
1984). Traditionally, the shareholders of an organization were considered as the main
stakeholders. Later this principle was expanded to include investors, employees, customers,
and suppliers as the four major stakeholders of a company. However, the modern stakeholder
theory rightly points out that several other groups such as banks that provide finance to the
company, trade unions, governmental bodies such as tax authorities and company law
regulators, political groups, associated corporations, and various communities with which the
company interacts are all stakeholders in a company. For example, it is not possible for any
organization to conduct its business in the present market conditions without seeking loans
and other financial assistance from banks. As such, it is quite obvious that banks are major
stakeholders in any organization with strong interests in the growth of the company.

The foremost stakeholders of an organization are the private owners or the shareholders of
the entity. Their main interests are profits, along with future performance and direction of the
company. The senior management of the company concentrates on targets and objectives,

12
performance and growth. The non-managerial employees are concerned with job security and
adequate remuneration. The customers or clients of the company look for value and quality of
the products or services of the company. They also expect the company to provide required
level of customer care and follow ethical practices in dealing with them such as fair pricing.
Suppliers are expected to provide quality products or services at reasonable prices so that the
end products satisfy the customers of the company. The trade unions ensure that the
minimum wages, working conditions, and legal requirements of employment are fulfilled
according to accepted social norms and government regulations. The community is interested
in the number of jobs created by the company, the safe and effective handling of
environmental issues by the organization, the involvement of the company in betterment of
the community, and the appreciation in the value of shares held by the community. The
banks, financial institutions and other lenders to the company closely observe the present
profits of the company, future risks, liquidity, credit scores, new business opportunities and
contracts of the company for steady growth, and other company development-related
factors.The stakeholder theory integrates the resource-based viewpoint with the market-based
viewpoint, while also adding social and political factors. The normative base of stakeholder
theory is its main core, since identification of all moral and philosophical guidelines that are
required for the management and successful operation of the company are included in this. In
the above theory, eight types of stakeholders had been specifically identified as having
influence on any organization. They are investors, suppliers, employees, customers, trade
associations, governments, political groups, and communities (Donaldson & Preston, 1995).
However, it is interesting to note that the banking sector, which is generally accepted as a
major stakeholder in the functioning of any organization had not been directly included or
mentioned in the above description. Hence, additional explanations to make this theory more
comprehensive had been necessitated. From the above point of view, this theory had been
further expanded to include three major attributes, namely power, urgency, and legitimacy
that decide the relationship of all the above stakeholders to the company. The power of the
stakeholders is the means or the power to impose their will on an organization due to their
various levels of relationship with the company. The urgency is the criticality or time
sensitivity of the claims of the stakeholders. The legitimacy is the socially expected and
accepted behaviors, structures, and norms that the company should follow to serve the
interests of the stakeholders in the best possible manner (Mitchell, et al, 1997). Since banks
are the major contributors of finance for running an organization, all the above three factors
of power, urgency, and legitimacy play an important role in their interests and influence on

13
the organization. The stakeholder theory as brought out by Freeman consists of five major
themes. They are definition and salience of stakeholders, actions and responses of
stakeholders, actions and responses of the company, performance of the company, and
debates on stakeholder theory and its validity. The stakeholder theory of Freeman had been
steadily getting prominence since 1995. There had been a substantial rise in both proponents
and detractors of this theory. The proponents point out that only shareholders cannot be
considered as stakeholders, since the interests of several other groups also have strong
interests in the performance of an organization. On the other hand, the detractors of this
theory argue that the stakeholder theory of Freeman undermines the principle of wealth
maximization of the shareholders, which is the most fundamental goal or objective of any
business. One of the major opponents of stakeholder theory is Charles Blattberg. He argues
that the stakeholder theory mainly consists of balancing or compromising the interests of
various stakeholders, which is not a full solution. He proposes a ‘patriotic’ conceptual
approach by an organization as an effective option to the stakeholder theory (Blattberg,
2004). Blattberg substitutes conversation as the right alternative to the negotiation theory of
Freeman while dealing with conflicts among various stakeholder interests. In spite of the
forceful arguments of Blattberg, this new theory does not make any major contribution to the
fundamental values of the stakeholder theory of Freeman. Banks are major financial
contributors to any company and they have to negotiate different terms and conditions if any
conflict of interest arises between their interests and the company performance. Mere
conversation cannot solve the problem. Proper negotiation and modification of the terms of
lending alone can provide proper solution to the situation.

Conflicts of Interests and Application of Stakeholder Theory

To arrive at a decision about the significance of stakeholder theory, we have to clearly
understand the validity of stakeholder theory and the extent to which it can be applied to an
organization. For this purpose, the stakeholders can be classified as primary stakeholders and
secondary stakeholders. The interests of the company are decided by its relationship to these
two types of stakeholders. The major objective of the company is to enhance its economic
strength and increase the profits. The stakeholders also have the same interest but they are
also keen on how the created wealth is distributed among the various groups of stakeholders.
This is where the struggle starts between the different parties. The shareholders can demand
that higher dividends be declared to them when profits increase. The government may
intervene and decide on different tax structures for various sets of income levels. The

14
employees can expect and fight for higher wages. The society can express that the company
utilize a portion of the profits for the betterment of the communities from which the company
is receiving its profits and fulfill its social obligations. The banks can increase the interest
rates to benefit from the higher profits of the company. The different demands or
expectations from the various stakeholders can easily create conflict and the company
management might find it very hard to satisfy all of them. This is where the stakeholder
theory helps an organization in balancing and compromising all these contradictory interests.
Organizations are forced to explore contentious relationships and conflicts of interests among
the stakeholders. They should identify compatible and incompatible interests and introduce
contingency procedures to examine and solve these conflicting interests. Stewardship Theory:
Main Tenets and Assumptions. Stewardship Theory has been framed as the organizational
behavior counterweight to rational action theories of management (Donaldson and Davis,
1991 & 1993). This theory holds that there is no conflict of interest between managers and
owners, and that the goal of governance is, precisely, to find the mechanisms and structure
that facilitate the most effective coordination between the two parties (Donaldson, 1990).
Stewardship Theory holds that there is no inherent problem of executive control, meaning
that organizational managers tend to be benign in their actions (Donaldson, 2008). The
essential assumption underlying the prescriptions of Stewardship Theory is that the behaviors
of the manager are aligned with the interests of the principals. Stewardship Theory places
greater value on goal convergence among the parties involved in corporate governance than
on the agent’s self-interest (Van Slyke, 2006). The economic benefit for the principal in a
principal-steward relationship results from lower transaction costs associated with the lower
need for economic incentives and monitoring. Researchers, in general, have tended to ignore
the principal as the agent and have overemphasized the role of the manager as the agent.The
‘model of man’ in Stewardship Theory is someone whose behavior is ordered such that
proorganizational behaviors have higher utility than individualistic behaviors (Davis et al.,
1997).This model of man is rational as well, but perceives greater utility in cooperative
behaviors than in self-serving behaviors. A steward’s utility function is maximized when the
shareholders’ wealth is maximized. The steward perceives that the utility gained from interest
alignment and collaborative behavior with the principal is higher than the utility that can be
gained through individualistic, self-serving behaviors (Davis et al., 1997). Stewards are
motivated by intrinsic rewards, such as reciprocity and mission alignment, rather than solely
extrinsic rewards. The steward, as opposed to the agent, places greater value on collective
rather than individual goals; the steward understands the success of the company as his own

15
achievement. Therefore, the major difference between both theories is on the nature of
motivation. Agency Theory places more emphasis on extrinsic motivation, while Stewardship
Theory is focused on intrinsic rewards that are not easily quantified, such as growth,
achievement, and duty.Stewardship Theory is mainly concerned with identifying the
situations in which the interests of the principal and the steward are. According to this theory,
there are situational and psychological factors that predispose individuals to become agents or
stewards. On the one hand, there are situational factors that influence the executive to become
a steward. These situational factors refer to the surrounding cultural context, rather than to an
organization’s work environment. Some of the situational factors that predispose an
individual towards stewardship are working in an involvement-oriented management system,
as opposed to a control-oriented management system; a collectivistic culture, as opposed to
an individualistic one; a low-power distance culture; or when corporate governance structures
give them authority and discretion (Donaldson and Davis, 1991). On the other hand, there are
psychological factors that predispose the executive to become a steward. Some of these
factors include having higher-order motivations, better disposition to identify with the
objectives of the firm, value commitment orientation, and greater use of personal power as a
basis to influence others To sum up, the psychological and situational characteristics of the
principal and the manager are antecedents for their rational choice between agency or
stewardship relationships The process through which the parties decide to be agents or
stewards can be synthesized as follows: First, this is a decision made by both parties of the
relationship. Second, the psychological characteristics and the cultural background of each
party predispose the individuals to make a particular choice. And finally, the expectation that
each party has about the other will influence the choice between agency or stewardship
relationships. Donaldson et al., (1990) remain silent, however, about the specific interactions
of antecedents in the prediction of Stewardship versus Agency Theory. When the factors that
surround the individual, both psychological and situational, are aligned to make him decide to
be a steward or agent, the situation is clear as there is no conflict inside the person. The
problem arises when there are conflicting forces between the psychological and the
situational factors. For instance, some of the psychological attributes of the individual may
predispose him to become an agent - such as when the manager is solely motivated by
extrinsic motives - whereas situational mechanisms such as empowerment management
systems orient him to become a steward. This mismatch between the management philosophy
of the company and the psychological characteristics of the manager remains rather
unexplored under current Stewardship Theory. In the existing literature on Stewardship

16
Theory it is not evident which are the underlying mechanisms that make an individual opt for
one position or the other, what sort of situational factors if any can influence the person to
transcend his own self-interest, and how the individual resolves his internal inter-motivational
conflict. This paper contributes to the explanation of how to resolve the dilemma of
conflicting factors within the agent. Another point that needs further exploration in
Stewardship Theory is the assumption that becoming a steward or an agent is the result of a
rational process. In this rational process, the individual evaluates the pros and cons of one
position versus the other. For instance, there are contributions in stewardship literature that
argue that stewards are not altruistic, but that there are situations where executives perceive
that serving shareholders’ interests also serves their own interests (Lane et al., 1998). In this
situation, agents would recognize that the company’s performance directly impacts
perceptions of their individual performance. In other words, in being effective stewards of the
organization, they also manage their own careers (Daily et al., 2003). This underlying
argument raises an important question: How can an individual rationally decide whether his
nature is that of a steward or an agent? What role does motivation play in this picture? I
believe there is still a lot of work to do in terms of the underlying assumptions and
mechanisms that define the Stewardship Theory, and further theoretical perspectives are
needed to help to explain its predictions.

Moral Obligation Theory

Over time, many ethical theories have developed. Ethical theories can be separated into two
main categories: one category includes theories of the good the other category includes
theories of the right. The distinction between these two categories is that theories of the good
attempt to explain what is worthwhile in life, while theories of the right explain what a
morally correct course of action is. Both of these categories can be divided into sub
categories.

17
 MORAL
THEORY

THEOTY OF THEORY OF
RIGHT WRONG
Figure 3 .1 :Moral Obligation Theory

Theories of the Good

Theories of the good attempt to explain what is worthwhile in life,such as beauty, justice, or
human happiness. Two types of theories of the good include theories of welfare and the will
of a deity. Deist theories of the good suggest that what is good or worthwhile is what God,
gods, or deity, whatever the case may be, say(s) is good, even if it is harmful to life. Welfare
theories of the good suggest that what is good promotes the welfare of life, as opposed to
what a deity says. Welfare theories of the good can be broken further into two more
categories: experiential and non-experiential. An experiential theory argues that good is
pleasurable which is known from prior experiences; this theory is also known as pleasure
theory, or hedonism. A non-experiential theory suggests that what is desired is good;
nonexperiential theory is also called desire theory. Even though something is desired, it does
not mean that it is pleasurable. However, the fulfillment of desires is what nonexperiential
theories account for

18
 Theories of the Good

Welfare Deity’s Will

Preferences Ideals

Non-
Experiential(Pleasure)
experiential(Desire)

Figure3.1 2 :Theories of the Good

It is also important to note the difference between intrinsic good and extrinsic, or
instrumental good. The intrinsically good are concepts which are good in and of themselves
and not for any other reason or for what they achieve. For example, the pleasure theory
argues that the only good in and of itself is pleasure. However, several instrumental goods
can be used to achieve pleasure, such as food, working out, and leisure activities, but food,
working out, and leisure activities are not good in themselves because they are only
instruments to achieving pleasure, and to some, may not bring pleasure at all. The distinction
between the two can easily be understood as the difference between the means and the ends.
The means are the instrumentally good things, and the end is the intrinsic good.

Theories of the Right

Theories of the right, as opposed to the good, describe actions that should be taken that are in
accordance to a general rule. There are two major categories of these types of theories:
teleological and deontological. Teleological theories apply a general rule that should be
followed to all possible courses of action and determine morality based on the end result of
that action. However, under a teleological theory, one action could be considered moral and

19
immoral at different times under different circumstances. For example, lying may be
justifiable and the right thing to do under certain circumstances, and morally bad in other
circumstances. Most teleological theories are considered consequentialist. Conversely,
deontological theories describe actions which are always good or always bad; they usually
construct a set of rules for morally right and morally wrong courses of action. Deontological
theories judge actions based on the means, not on the ends. Some examples of teleological
theories are ethical hedonism, utilitarianism, virtue, and welfarism, each of which apply a
different rule to certain actions. Examples of deontological theories include universalized
duty, rights, theism, and existentialist subjectivism.

Theories of
the Right
Teleological
•Ethical Hedonism
•Utilitarianism
•Virtue
•Welfarism

Deontological
•Universalized Duty
•Theism
•Existentialist

Figure 1.1 3 : Theories of the Right

20
 3.2 Conceptual Framework

In this study, the strength of the relationship between corporate social responsibility and
financial performance is tested. In addition the relationship between firm size and CSR
activities are tested .To test the above relationship we declare variables as follow:

CSR Financial
performance
Independent Dependent
Variables Variables

Size OF the Bank CSR Activities

Figure 3.2 1 Conceptual Framework

3.3 Research hypothesis:

Table 3.3: Research hypothesis:

Hypothesis No. Hypothesis

Hypothesis 1 H01: There is no significant relationship between the levels of bank
(CSR) and the bank’s (CFP).
Vs
H11: There is no significant relationship between the levels of bank
(CSR) and the bank’s (CFP).

Hypothesis 2 H02: There is no significant relationship between bank size and CSR
Vs
H12: There is significant relationship between bank size and CSR

Hypothesis 3
H03: The Bank does not use any structured guideline in CSR
Vs
H13: The Bank uses structured guideline in CSR

21
 Chapter 4: Methodology
4.1 Research design:
This research is trying to find out the impact of (CSR) on financial performance in context of
Premier Bank, Bangladesh. At the same time this research paper will also try to find out if
Bank size has any affect on CRP. This research is mainly a descriptive study because it will
try to find out the association between variables. The time dimension for collecting research
data is longitudinal and cross sectional

4.2 Data
The study is purely based on the information collected from primary and secondary sources.
The primary sources are Structured, semi-structured and unstructured interview of concerned
officials of the “THE PREMIER BANK LTD’.
Secondary data are collected from the following sources-
 Annual Reports
 Banks’ websites
 Bangladesh Bank’s Publications
 Newspapers

4.3 Population and Sample

Population of the study is all the banks operated in Bangladesh.

The financial system of Bangladesh consists of Bangladesh Bank (BB) as the central bank, 4
State Owned Commercial Banks (SCB), 5 government owned specialized banks, 30 domestic
private banks, 9 foreign banks. Sample size of this study is just 1 bank named Premier Bank
Ltd Bangladesh from which I have collected 4 Years data.

Microsoft Excel 2007( especially Data analysis add-on) has been used as the statistical data
analysis tool. This software helped to carry on different types of analysis for this research.
Regression model has been used to know how well the independent variables are explaining
the dependent variable and whether the null hypothesis can be rejected or not. Pivot analysis
is also used excessively in this study.

4.4 Reliability, Validity and Generalizability

The study is reliable in the context that – the questionnaire was presented and filled by responsible
officers, in front of the interviewer. Though the questionnaire was not fully answered or filled by the
interviewee, it was completed based on their descriptive and indirect answers for those questions.

22
Then after completion, the entire questionnaire was presented to check if any objection or correction
is going to be applied for the questionnaire.

The data given by the company is considered valid because, multiple sources and personnel was
inquired for data collection to collect most accurate data. Indirect and conversational approach was
used to get answers of critical questions.

Indirect Data collected from personnel or sources are decrypted in demanded terms and converted into
general concept, accepted and standard for business world practices.

4.5 Ethical Stance

No hidden record of conversation was acquired for further use, and no unauthorized data was used for
survey purpose. Complete survey questionnaire was presented in front of the officers to ensure that –
no unwanted and confidential data is expressed against the firm.

As for the interviewer, of small amount but accurate and verified data is used for survey purpose, by
physical presence which is possible to be verified.

23
Chapter 5: Analysis, Findings and Discussions
The Premier Bank Ltd. Claims that it views corporate social responsibility from the following
five dimensions:
1. Economic responsibility - to earn profit for owners
2. Legal responsibility - to comply with the law (society's codification of right
and wrong)
3. Ethical responsibility - not acting just for profit but doing what is right, just
and fair
4. Voluntary and philanthropic - promoting human welfare and goodwill
5. Being a good corporate citizen : contributing to the community and the quality
of life

5.1 Economic responsibility

Premier Bank Ltd strongly believes that it creates more values for our shareholders with a
good return on their investment and is committed to protect their long-term interest. In its
annual report 2010, it asserts as follow “We are aware to maintain our financials and ratios
stronger and better than industry standard. (Annual Report, 2010)”

Figure 2 5.1 Economic responsibility

24
5.2 Legal responsibility - to comply with the Laws, Rules and
Regulations
The Bank claims that it complies with all regulatory requirements in all its operations and
conducts its business within a well-framed control supported by bundle of policy statements,
written procedures & manuals. The Bank asserts it ensures Corporate Governance practices at
all levels which enable it to establish professionalism together with trust and confidence
among the interested parties, builds capacity to operate business efficiency and creates a
congenial working environment inevitable to meet the challenges of the present competitive
business arena. It believes that financial information is prepared as per financial accounting
policies in line with the International Financial Reporting Standard and best financial
reporting practices in the country and public disclosure policy of material information has
been adopted in accordance with the requirement as set out in legislation and in the rules and
regulations of SEC, DSE and other applicable laws. Nonetheless premier bank have faced
some legal issue such as conflict with tax authority about determining tax, investing in capital
market more than limit set by Bangladesh Bank etc.
Table 5.1 1Conflict with NRB

Year Assessment Year Status

2001 2002-2003 Assessment completed
2002 2003-2004 Assessment completed
2003 2004-2005 Assessment completed
2004 2005-2006 Appeal filed with High Court
2005 2006-2007 Assessment completed
2006 2007-2008 Appeal filed with High Court
2007 2008-2009 Appeal pending with Tribunal
2008 2009-2010 Appeal filed hearing continue
2009 2010-2011 Appeal filed
2010 2011-2012 Appeal filed
2011 2012-2013 Return submitted.
2012 2013-2014 Return submitted.

25
 5.3 Ethical responsibility
Premier Bank believes it tries to ensure high level of transparency and accountability in all its
business transactions and ethical responsibility at every stage is significant to carry out its
duties. It claims its solemn promise is to transact banking business in a confidential &
professional manner. It asserts that it respect the views and opinions of others; their dignity.

5.4 Voluntary and philanthropic

CSR Expenditure Growth

৳ 140.00
Millions

৳ 125.48
৳ 120.00

৳ 100.00
CSR Expense

৳ 80.00

৳ 60.00 Total
৳ 58.27
৳ 40.00

৳ 20.00 ৳ 21.00
৳ 9.00
৳-
2010 2011 2012 2013

Figure 5.4 Voluntary and philanthropic

26
 Table 5.4: Investment on CSR

Year Investment on CSR

2010 9000000
2011 21000000
2012 58265000
2013 125475100
Grand 213740100
Total

From 2010 to 2014, It contributed Taka 213740100 through donations and charities program,
primarily directed towards health care, social welfare, supporting educational institutions,
research studies, sports d to ensure the less privileged a more secure future.

5.5 CSR activities of Premier Bank from 2010 to 2013

The following table highlights the CSR expenditure of Premier Bank at a glance

Table 5.5 CSR expenditure of Premier Bank at a glance

Sum of
Investment on
sectors year Activities CSR
Disaster
Relief 76680000
2011 9100000
Distribution of warm clothes among the poor people to assuage
their sufferings from cold wave in winter 9100000
2012 29580000
Contribution in Disaster Management (prime minister fund) 20000000
Distribution of Warm Clothes among the winter hit poor
people 9100000
financial assistance for the bereaved family members of BDR
Tragedy 480000
2013 38000000

27
 A donation for Tk. 10.00
million to Prime Minister Relief Fund for Savar
Rana Plaza Tragedy. 10000000
Distribution of Warm Clothes among the winter hit poor
people 17520000
Ms. Sonia Hasan as BDR victim 480000
The Bank donated to Prime Minister Relief Fund an amount of
Tk. 10.00 million 10000000
Education 62565000
2010 285000
A. K. High school 100000
Barishal Degree College 100000
Kalkini High School 25000
Rahim Uddin High Scool 60000
2012 680000
G. K. High school 100000
Kashemia Dalilia Yatimkhana 140000
Pingri High School 100000
Rajanpur Degree College 120000
Rajapur Pilot High School 120000
Shaheed Raja Degree College 100000
2013 61600000
Gopalgonj Zila Samity for Scholarship 1000000
Monoshita Mohila Mohabiddyaloy
Monsur Uddin Mohila College 500000
Tofazzal Hossain Degree College 100000
Z. Rahman Premier Bank School & College, Banshgari,
Bhairab, Kishoregonj 60000000
Environment 250000
2012 250000
Bangladesh Banno Prani Seba 100000
Sponsoring of PDF summer challenge 150000
health and 21395000

28
Safety
2010 285000
Financial assistance to Mr. Arifur Ali for treatment of cancer
disease 200000
Mr. Rafique for treatment. 25000
Mrs. Rubina Begum for treatment. 60000
2011 575000
Financial assistance to Mr. A. S. M. Abdur Rob for treatment 75000

Financial assistance to Mrs. Taslima Khanom for treatment of

Kidney disease. 500000
2012 10410000
Financial assistance to Mr. Abul Mostakim for treatment 300000
Financial assistance to Mr. Habibir Rahman freedom Fighter
for treatment. 10000
Financial assistance to Mr. Munibur Rahman for treatment of
cancer disease 10000000
Dhaka Shishu (Children) Hospital for infrastructure
development. 100000
2013 10125000
Financial assistance to Mr. Munibur Rahman for treatment of
cancer disease 10000000
Mr. Khairul Islam Shohag for treatment. 100000
Mr. Mahbub E Alam, Sub Inspector for treatment. 25000

Social
Welfare 4064345
2010 610000
Eidgah Mosque, Dhanmondi, Dhaka 30000
Reconstruction of Chunarughat Sadar Jam-E-Mashjid,
Habigonj 100000

29
 Support for cOl victim people 480000
2011 2729245
Eidgah Mosque, Dhanmondi, Dhaka 25000
Islamic Foundation towards publishing Posters and Leaflets 175000
Kububbag Pak Darbar Sharif, Dhaka 500000
Reconstruction of Chunarughat Sadar Jam-E-Mashjid,
Habigonj 300000
Standing Besides Hajj Pilgrims 1249245
Support for the victims of Pilkhan Killing 480000
2012 225000
Bangladesh Obsor Board. 100000
Galua Islamia Dakhil Madrasha 50000

Mosjid e Gausul Azam complex, Mohakhali, Dhaka 50000

Niketon welfare society, Dhaka 25000
2013 500100
Conference for school Banking 50100
Dhaka University for Religious Activities 10000
Iftar Mahfil, Banani Thana, Dhaka 50000
Janab Kari Belali, Quraner Alo Competetion 40000
Mosjid e Gausul Azam Doa Mahfil 50000
Saleha Begum, M/O Late Md. Mozammel, Ex- TJO 200000
SMESPD 100000
Sport 34220000
2010 850000
Army Golf Club 450000
Bangladesh Football Federation for BPL 400000
2011 1000000
Rewarding the Bangladesh Women Cricket Team 500000
Sponsoring Korean Cup Golf Tournament 500000
2012 17120000
Bangladesh Football Federation for Branding and Installation
of Champions League. 120000
Bangladesh Football Federation for Champions League 2011 17000000

30
 2013 15250000
Army Golf Club for Premier Bank Golf Tournament 950000
Bangladesh Football Federation for Championship League 1800000
Sheikh Rasel Krira Chakra 12500000
Grand Total 213740100

Sector Wise Expenditure In Last Five Year:

From ’Figure 5.5 SECTOR WISE EXPENDITURE IN LAST FIVE YEAR ’we can interpret
that the bank spent most of its CSR expenditures on Disaster relief sector in last five years.
Expenditure on health and safety, and sports are also mentionable. But from the above table
we can see that most of the expense of education sector occurred in 2012 when the bank
establishes a school by the investment of 60 million.

SECTOR WISE EXPENDITURE IN LAST FIVE YEAR

Sport
16%
Social Welfare
2%
Others Disaster Relief
7% 36%

health and
Safety
10%

Environment,
250000 Education
29%

Figure 5.5 SECTOR WISE EXPENDITURE IN LAST FIVE YEAR

31
 5.6 Investment on Disaster and Relief Sector
Table 5.6 Investment on Disaster and Relief Sector

Row Labels Disaster Relief

2011 9100000
2012 29580000
2013 38000000
Grand Total 76680000

Disaster Relief
40
Millions

35
30
25
20
Disaster Relief
15
10
5
0
2011 2012 2013

Figure 5.6 Investments on Disaster and Relief Sector

Although the bank spent no money on Disaster and relief sector in 2010, but from 2011 it has
increased its share. The growth decrease in the year2013 comparison to 2012

5.7 Investment on Education

Table 5.7 Investment on Education

Sum of Investment on
CSR Column Labels

32
 Row Labels Education
2010 285000
2012 680000
2013 61600000
Grand Total 62565000

Education
70000000

60000000

50000000

40000000

30000000 Education

20000000

10000000

0
2010 2012 2013

Figure 5.7 Investment on Education

Education plays an important role in shaping not only individual’s career but also prosperity
of state. The education helps people to earn recognition and respect in the society.
Undoubtedly education is both socially & personally an indispensible part of human life.

However the inequalities in the standards of education are still a major issue that needs to be
solved as early as possible. The premier Bank which claims itself as one of the leading banks
shows little recognition on this sector. From Figure 5.7 Investment on Education we can see
that it spent very little amount of money on this sector .There is no mentionable expenditure
from 2010 to 2112, but in 2013 it shows a growth which is not satisfactory for a large bank
like Premier

5.8 Investment on Environment

Figure 5.8 Investment on Environment

33
 Total
300000

250000

200000

150000
Total
100000

50000

0
Environment
2012

It is the world where we live, breathe, eat etc. Our entire life support system is dependent on
the well-being of all of the component of environment. The followings are the main reasons
behind protecting our earth-

 To preserve our food chain

 To preserve our ecosystem
 Natural Beauty
 The earth is our only home

As a mainstream bank.”THE PREMIER BANK LTD’ fail to make a good contribution to

protect our environment If we see ‘Figure 5.8 Investment on EnvironmentIt’ it only makes a
very little contribution in 2012 which is very unsatisfactory

Figure 3 5.8 Investment on Environment

34
 5.9 Investment on Health and Safety

Table 5.9 1 Investment on Health and Safety

Sum of Investment on
CSR Column Labels
health and
Row Labels Safety
2010 285000
2011 575000
2012 10410000
2013 10125000
Grand Total 21395000

health and Safety

12000000

10000000

8000000

6000000
health and Safety
4000000

2000000

0
2010 2011 2012 2013

Figure 45.9 Investment on Health and Safety

Health is a state of complete physical, mental, and social well-being and not merely the
absence of disease or infirmity. Good health increases productivity and ensures peace in
family and society. The “THE PREMIER BANK LTD’ only spent a very small share on this
sector. In 2010 and 2011 it was very insignificant amount. Although it has increased its share
in 2012 and 2013, but that was not up to mark.

35
 5.10 Investment on Social Welfare

Social Welfare
3000000

2500000

2000000

1500000
Social Welfare
1000000

500000

0
2010 2011 2012 2013

Figure 55.10 Investment on Social Welfare

Limited companies enjoy limited liability, so, the society bears the risk of the firms. So, in
response the firms have some responsibility to society not limited to simply supply quality
service. Like many other sectors, The “THE PREMIER BANK LTD’ did not make a
remarkable contribution in this area. It spent only a small amount of its total expenditure of
CSR

36
 5.11 Investment on Sport

Sport
18000000
16000000
14000000
12000000
10000000
8000000 Sport
6000000
4000000
2000000
0
2010 2011 2012 2013

Figure 65.11 1: Investment on Sport

Sports teach us discipline, dedication, responsibility and works as stress buster. some the
benefits are highlighted below:

 Fitness
 Stress Buster
 Learning a Skill
 Teamwork
 Helps to Increase Decision-Making Ability
 Improving Economy

The “THE PREMIER BANK LTD’, unlike Many sector of CSR, invested a handsome
amount on sports especially in the year, 2012 and 2013, although the investment in 2010and
2011 was insignificant. Sponsorship on BFF (Bangladesh football federation) is
praiseworthy.

37
 5.12 Year wise CSR Analysis
CSR Expenditure in 2010 in various Sector
Table 5.12 1: CSR Expenditure in 2010 in various Sector

Column Labels
Row Labels 2010
Education 285000
health and
Safety 285000
Others 6970000
Social Welfare 610000
Sport 850000
Grand Total 9000000

2010

77%
Education
health and Safety
Others
7% Social Welfare
10%
3% Sport

3%

Figure 5.12 1: CSR Expenditure in 2010 in various Sector

In the year 2010, the ‘Sports’ and ‘others’ sectors got more attention and appeared to be the
most popular sectors for CSR activities as huge investments are made by the bank in these
segments. Besides these two important sectors large concentrations are found in the field of
Social welfare, health and safety sector.

38
 CSR Expenditure in 2011 in Various Sector

Table 5.12 2 CSR Expenditure in 2011 in Various Sector

Investment on CSR year

sectors 2011
Disaster Relief 9100000
health and Safety 575000
Others 7595755
Social Welfare 2729245
Sport 1000000
Grand Total 21000000

CSR Expenditure in 2011 in various Sector

Disaster Relief health and Safety Others Social Welfare Sport

5%
13%

36%
43%

3%

Figure 5.12 3 : CSR Expenditure in 2011 in various Sector

In the year 2011, the ‘Disaster and Relief’ and ‘Other’ sectors got more attention and
appeared to be the most popular sectors for CSR activities for The “THE PREMIER BANK
LTD’. Besides these two important sectors large concentrations were also found in the field
of Social welfare and Sport.

39
 CSR Expenditure in 2012 in various Sector

Table 2 5.12 3 :CSR Expenditure in 2012 in various Sector

Sum of Investment on
CSR year
sectors 2012
Disaster Relief 29580000
Education 680000
Environment 250000
health and Safety 10410000
Social Welfare 225000
Sport 17120000
Grand Total 58265000

CSR Expenditure in 2012 in various Sector

Disaster Relief Education Environment health and Safety Social Welfare Sport

1%
1%
18% 0%

51% 29%

Figure 75.12 3 : CSR Expenditure in 2012 in various Secto

In the year 2011, the ‘Disaster Relief’ and ‘Sports’ sectors got more attention and priority
CSR activities for CSR Expenditure. Besides these two important sectors large concentration
is found in the field of Health and Safety.

40
 CSR Expenditure in 2013 in various Sector

2013
Disaster Relief Education health and Safety Social Welfare Sport

1%
8% 12%

49% 30%

Figure 85.12 4 : CSR Expenditure in 2013 in Various Sectors

Table 5.12 4 : CSR Expenditure in 2013 in various Sector

Investment on CSR year

sectors 2013
Disaster Relief 38000000
Education 61600000
health and Safety 10125000
Social Welfare 500100
Sport 15250000
Grand Total 125475100
In the year 2013, the ‘Education’ and ‘Disaster relief ’ sectors were getting more attention
and appeared to be the most popular sectors for CSR activities for Premier Bank. Besides
these two important sectors large concentration is found in the field of sports.

41
 5.13 Comparative analysis of various sectors in last five years
Table 35.13 1 : Comparative analysis of various sectors in last five years

Investment on CSR
Grand
Row Labels 2010 2011 2012 2013 Total
Disaster Relief 9100000 29580000 38000000 76680000
Education 285000 680000 61600000 62565000
Environment 250000 250000
health and Safety 285000 575000 10410000 10125000 21395000
Others 6970000 7595755 14565755
Social Welfare 610000 2729245 225000 500100 4064345
Sport 850000 1000000 17120000 15250000 34220000
Grand Total 9000000 21000000 58265000 125475100 213740100

CSR at Various Categories in Last Four Year

2010 2011 2012 2013

Figure 5.13 1 : CSR at Various Categories in Last Four Year

42
 70000000
60000000
50000000
40000000
30000000
20000000
10000000
0
2010 2011 2012 2013

Disaster Relief Education Environment health and Safety

Others Social Welfare Sport

Figure 5.13 2 CSR at Various Categories in Last Four Years in Line chart

If we observe the above figure and table we can conclude that the bank did not invest on
various sectors in an organised way and variation of investment of the same sector is
unintentional. The figure suggests that the firm did not give priority on educational sectors
through the years. Only in year 2013.it invested 6 million taka on a school. In the disaster and
relief sector firm shows a healthy growth as the figure suggests. Health and safety,
environment, Sports do not exhibit growth. at the same time ‘Figure 5.13 2 CSR at Various
Categories in Last Four Years in Line chart ’shows the similar trends

5.14 Hypothesis Test

H01: There is no significant relationship between the levels of bank (CSR) and the bank’s
(CFP).:
Regression shows that CSR expenditure explains only 15.4% of (CFP). ANOVA shows that
the calculated significant value of these two variables is greater than 0.05. Therefore, we
accept the null hypothesis that said there is no significant relationship between CSR
expenditures and (CFP).
H02: There is no significant relationship between bank size and CSR
Regression shows that Number of Emplyees explains 84% of (CFP). ANOVA shows that the
calculated significant value of these two variables is less than 0.05. Therefore, we reject the
null hypothesis that said there is no significant relationship between the levels of bank (CSR)
and the number of employees.

43
H03: The Bank does not use any structured guideline in CSR

For the lack of data we cannot test this hypothesis.

44
 Chapter 6 : Conclusion and Recommendations

6.1 Conclusion
Although Premier Bank Ltd. expended a small amount of their profit as CSR activities,
expenditures of various sectors are increasing year by year. The practicing Sectors of CSR in
Premier Bank Ltd. is mainly in Disaster and Relief, health, Social Welfare. Expenditure on
Environment is a rare case.

It can be concluded from the study that all banking organization shall have appropriate policy
in place for establishing positive organizational culture and social responsible mindset of
stakeholders. If commitment for becoming a social responsible banking organization between
management and stakeholders and Accountability and creditability can be demonstrated
through effective and efficient internal audit, customers and community also be benefited
with risk reduced and quality enhanced. CSR is no longer exclusively practices in Developing
countries like Bangladesh are showing interest and commitment to CSR as well. Bangladesh
consist many social problems. Government alone cannot solve this problem. As a business
partners it is need to everyone specially commercial banks take part to reform the society.
Because CSR is the more common place among banks, there are concerns the some banks
promote an image of CSR whether or not they have true strategy in place and the results to
show. Banks like Premier Bank Should come forward to contribute to the Society.

6.2 Recommendations:

Premier Bank Ltd considers only a few areas where it concentrated its CSR expenditures. The
bank should diversify their CSR practices and considered the other important areas of the
society, such as
 Women empowerment,
 Sanitation in rural areas,
 Rural development activities related to the poverty alleviation.
This can ensure the overall development of the country. For this reason, the central bank,
Bangladesh Bank monitoring the CSR adoption and performance of banks and also give
some directions to the banks and provide some priority areas for CSR practice. It would be
helpful if the government created a CSR policy providing guidance on CSR activities.
Awareness building Programme would be useful. If there was a greater awareness amongst
banks about corporate social responsibility and the kinds of CSR activities they could

45
undertake. Those undertaking CSR must ensure that they are complying with the law in
relation to labour rights and any legal obligations they may have in protecting the local
community and environment. Institutions must introduce CSR as a course for it to be treated
as pure academic
Discipline, so as to train experts in that area, because when that is done the deprived
Communities in the country will one way or the other is developed. Institutions must also
collaborate with the multinational companies by sending students on attachment to the
multinational companies when it comes to CSR activities because the indigenous companies
do not have structured CSR policies.

6.3 Reflection of the Researcher

While reflecting on the experience of writing a thesis, I came to the realization that I truly enjoyed this
process, at least most of it. I am the type of person who loves to learn and always seeks to obtain more
knowledge in and out of the classroom. I am especially passionate about learning things related to
corporate world and also about real-life practice. Though I originally had no idea as to what CSR
practice inside a Commercial Bank is, after spending a several days of Interview , researching and
writing about them I can now say I know more than I ever could have hoped about CSR in
Commercial Banks.

Though it was difficult at times to motivate myself to do the work, on the whole I enjoyed the
research and writing and found that the work was much more manageable than I thought it would be. I
viewed this work in five parts of which the first was planning. This data-collection and interviewing
part was one of the most difficult as I tried to match my ideas for what I had to collect and what the
interviewee is going to answer directly or indirectly. I enjoyed doing my own research and conducting
interviews since I feel like with this research I was able to make a contribution to the field and
produce something new. My favourite part was actually interviewing the officers of EXIM Bank
Foundation and acquires many rare or undisclosed information by officials, intentionally or
unintentionally.

I can now look back and realize that this experience has helped me both as a student and as a real-life
working person. Research and writing skills are not only valued in an academic setting, but also in the
real-life as well, though the result is very indirect. Additionally, working under Mithun Kumar
Acharjee has given me the opportunity to develop a standardized and formal method to analyze and
ordering of Data and finally interpret and present them.. Overall, I feel that this has been both a
valuable and enjoyable experience and I now feel prepared and excited to see the implementation of
my study in other research or in real business-life.

46
47
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 Appendices
Data Collection Instrument
 Questionnaire - Part A : Expert opinion Survey

Part B: Semi-Structured Interview ( with Likertscale and Ranked Data)

Part C: Survey on Compliance Measurement

 Yearly Annual Report by Exim Bank Foundation.

 Recommended use of Annual Financial Report and website discloser by officials.
 Collection of Books about CSR from Internet, previous Thesis, Dissertations and documents
available or served by company.

Interview Transcripts:
A copy of questionnaire was served, while no transcription, conversion or statistical measurement was
made.

Statistical Output

CSR
After Tax Income Expenditure
1772.02 9000000
510.9 21000000
603.41 58265000
785.75 125475100

SUMMARY OUTPUT on the relationship between CSR expenditure and CFP

Regression Statistics
Multiple R 0.392037874
R Square 0.153693695
Adjusted R -
Square 0.269459458
Standard
Error 59.04755827
Observations 4

ANOVA
df SS MS F Significance F
Regression 1 1266.375 1266.375 0.363211 0.607962126
Residual 2 6973.228 3486.614
Total 3 8239.603

52
 Standard Upper Lower
Coefficients Error t Stat P-value Lower 95% 95% 95.0% Upper 95.0%
-
Intercept 85.91699249 61.4534 1.398084 0.29696 -178.4956366 350.3296 178.496 350.3296216
After Tax - -
Income 0.035382636 0.05871 -0.60267 0.607962 -0.28799072 0.217225 0.28799 0.217225448

CSR Expenditure Firm size

9 965
21 1117
58.265 1259
125.4751 1283

SUMMARY OUTPUT

Regression Statistics
Multiple R 0.83990781
R Square 0.705445129
Adjusted R
Square 0.558167694
Standard Error 97.64599927
Observations 4

ANOVA
Significance
df SS MS F F
Regression 1 45670.518 45670.518 4.78991 0.160092
Residual 2 19069.482 9534.7412
Total 3 64740

Standard Upper Lower Upper

Coefficients Error t Stat P-value Lower 95% 95% 95.0% 95.0%
Intercept 1030.197048 75.4175 13.6599 0.0053 705.7018 1354.6923 705.7018 1354.6923
CSR
Expenditure 2.354316325 1.076 2.189 0.160 -2.274 6.983 -2.274 6.983

53