First, a disclaimer: I have not found any solutions to how karma affects the game. These are just some interesting points I have learned in my investigations:(1) Males and females both have a theoretical starting karma of 0 to 19. Goofing around, I tried running Bane in a window. This slows down the speed of the program, so I don't recommend it, but one thing I noticed thanks to this slow down: during character generation, when one is "casting" karma, the sequence for males and females runs from 0 to 19. Although I have never yet succeeded in casting a male with 19 karma or a female with 0 karma, these are theoretical possibilities.
(2) Karma is much more than a one-byte value. A character's starting karma determines a whole block of bytes in the character's record (from approximately offset 360 to 391 from the start of the character's name, if I've counted right). These bytes all have the same value depending upon starting karma -- raising karma during the game does not appear to raise them. Furthermore, the value of these bytes does not increase linearly with karma; instead, it forms a bell curve:
Starting Karma Karma Block Value
0 4
1 8
2 12
3 16
4 20
5 24
6 28
7 32
8 36
9 40
10 36
11 32
12 28
13 24
14 20
15 16
16 12
17 8
18 4
19 0
(3) These values carry over to CODS, too. In fact, a CODS character has even more bytes in its "karma block." If the character's karma changed during Bane, the "karma block" values will be adjusted to the level appropriate for that karma. Just for kicks, a raised a character's karma to 20 in Bane before importing. The karma-block value after importing was something like 250 or 255.
(4) The moral of this story: if you want to experiment about the effect of karma, you can't just change one byte. Good luck.