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Effect of corporate social responsibility scores on bank efficiency: The moderating role of institutional context

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  • Antonio Fabio Forgione
  • Issam Laguir
  • Raffaele Staglianò

Abstract

This paper examines how corporate social responsibility (CSR) affects bank efficiency in a sample of large commercial banks across 22 countries over the 2013–2017 period. We used a one‐step model of stochastic frontier analysis for panel data to estimate bank profit efficiency and found that the greater the activities in the social and environmental dimensions of CSR, the lower the level of efficiency, whereas activities in the corporate governance dimension are generally not relevant. This result supports the relevance of agent perspectives for these firms. However, we also found that institutional context moderates this baseline result. Specifically, all CSR activities have a positive impact on bank efficiency in common law countries and countries where the effectiveness of stakeholder protection is high. This supports the view that contexts that favor firms' sustainable behavior also increase bank efficiency.

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  • Antonio Fabio Forgione & Issam Laguir & Raffaele Staglianò, 2020. "Effect of corporate social responsibility scores on bank efficiency: The moderating role of institutional context," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(5), pages 2094-2106, September.
    • Handle: RePEc:wly:corsem:v:27:y:2020:i:5:p:2094-2106
    DOI: 10.1002/csr.1950
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    7. Paola Brighi & Antonio Carlo Francesco Della Bina & Valeria Venturelli, 2022. "Do ESG Investments Mitigate ESG Controversies? Evidence From International Data," Centro Studi di Banca e Finanza (CEFIN) (Center for Studies in Banking and Finance) 0084, Universita di Modena e Reggio Emilia, Dipartimento di Economia "Marco Biagi".
    8. Hai-Yen Chang & Lien-Wen Liang & Yu-Luan Liu, 2021. "Using Environmental, Social, Governance (ESG) and Financial Indicators to Measure Bank Cost Efficiency in Asia," Sustainability, MDPI, vol. 13(20), pages 1-20, October.
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