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How do corporate governance and corporate social responsibility affect credit risk?

Author

Listed:
  • Hunjra, Ahmed Imran
  • Jebabli, Ikram
  • Thrikawala, Sujani Sudhara
  • Alawi, Suha Mahmoud
  • Mehmood, Rashid

Abstract

We contribute to the existing literature by examining the relationship between corporate governance, corporate social responsibility (CSR) and bank risk. We apply fixed effect model to analyse the results, we find that board size, board meetings and board independence significantly and negatively affect banks’ credit risk. However, ownership concentration significantly increases bank credit risk. Further, we find that CSR leads to decreased bank credit risk. Our study enables banks in emerging economies to gain a better understanding of how to implement effective governance & CSR activities to mitigate credit risk.

Suggested Citation

  • Hunjra, Ahmed Imran & Jebabli, Ikram & Thrikawala, Sujani Sudhara & Alawi, Suha Mahmoud & Mehmood, Rashid, 2024. "How do corporate governance and corporate social responsibility affect credit risk?," Research in International Business and Finance, Elsevier, vol. 67(PA).
    • Handle: RePEc:eee:riibaf:v:67:y:2024:i:pa:s0275531923002659
    DOI: 10.1016/j.ribaf.2023.102139
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    Keywords

    Corporate governance; CSR; Credit risk; Asian emerging economies;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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