Title: Corporate social responsibility and financial performance: an analysis of bank community responsibility

Authors: Rocco Ciciretti; Nada Kobeissi; Yun Zhu

Addresses: Facolta di Economia, Università degli Studi di Roma, Tor Vergata, Rome, Italy ' Department of Management, Long Island University – Post, Brookville, NY 11548, USA ' The Tobin College of Business, St. John's University, 8000 Utopia Parkway, Queens, NY 11439, USA

Abstract: This paper investigates the impact of a bank's community responsibilities on financial performance. It utilises various improved performance measures (short and long run performance, book and market value, labour productivity and overall productivity), as well as a test for causality. The paper finds significant evidence that banks were better off by adhering to their mandated community responsibilities. In fact, banks were more likely to be rewarded with lower cost of capital for both debt and equity. In terms of causality, the paper finds that social and financial performances could be codetermined; however, the relationship between these two variables seemed to be stronger in the direction of social responsibility having an impact on financial performance.

Keywords: corporate social responsibility; CSR; bank community responsibility; financial performance; bank responsibilities; performance measures; cost of capital; debt; equity; causality.

DOI: 10.1504/IJBAAF.2014.067026

International Journal of Banking, Accounting and Finance, 2014 Vol.5 No.4, pp.342 - 373

Accepted: 03 Oct 2014
Published online: 31 Jan 2015 *

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