IDEAS home Printed from https://ideas.repec.org/a/gam/jrisks/v13y2025i1p10-d1564436.html
   My bibliography  Save this article

Corporate Social Responsibility, Efficiency, and Risk in US Banking

Author

Listed:
  • Fathi Jouini

    (Department of Accounting, School of Business, King Faisal University, Al-Ahsa 31982, Saudi Arabia)

  • Mohamed Amine Chouchen

    (Department of Finance and Accounting, FSEG Sousse, University of Sousse, Sousse 4023, Tunisia)

  • Ahlem Selma Messai

    (Department of Finance, School of Business, King Faisal University, Al-Ahsa 31982, Saudi Arabia)

Abstract

Banks have faced increasing attention regarding their ability to balance Corporate Social Responsibility (CSR) initiatives, operational efficiency, and credit risk management, particularly in the wake of global financial challenges. This study examines the interplay between CSR, efficiency, and credit risk in 131 US banks from 2010 to 2018. Using the Choquet integral, two-step Data Envelopment Analysis, and a dynamic panel with the Generalized Method of Moments, the findings reveal a virtuous circle between CSR and credit risk, where CSR enhances credit risk profiles. Similarly, efficiency and risk exhibit mutual reinforcement. However, a vicious circle is identified between CSR and efficiency, indicating trade-offs between CSR objectives and operational efficiency. These insights guide policymakers and bank managers in optimizing this balance.

Suggested Citation

  • Fathi Jouini & Mohamed Amine Chouchen & Ahlem Selma Messai, 2025. "Corporate Social Responsibility, Efficiency, and Risk in US Banking," Risks, MDPI, vol. 13(1), pages 1-24, January.
    • Handle: RePEc:gam:jrisks:v:13:y:2025:i:1:p:10-:d:1564436
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-9091/13/1/10/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2227-9091/13/1/10/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Wu, Meng-Wen & Shen, Chung-Hua, 2013. "Corporate social responsibility in the banking industry: Motives and financial performance," Journal of Banking & Finance, Elsevier, vol. 37(9), pages 3529-3547.
    2. Florian Neitzert & Matthias Petras, 2022. "Corporate social responsibility and bank risk," Journal of Business Economics, Springer, vol. 92(3), pages 397-428, April.
    3. Baron David P & Agus Harjoto Maretno & Jo Hoje, 2011. "The Economics and Politics of Corporate Social Performance," Business and Politics, De Gruyter, vol. 13(2), pages 1-48, August.
    4. Edward Nelling & Elizabeth Webb, 2009. "Corporate social responsibility and financial performance: the “virtuous circle” revisited," Review of Quantitative Finance and Accounting, Springer, vol. 32(2), pages 197-209, February.
    5. Baron, David P. & Agus Harjoto, Maretno & Jo, Hoje, 2011. "The Economics and Politics of Corporate Social Performance," Business and Politics, Cambridge University Press, vol. 13(2), pages 1-46, August.
    6. Robert G. King & Ross Levine, 1993. "Finance and Growth: Schumpeter Might Be Right," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(3), pages 717-737.
    7. Meng-Wen Wu & Chung-Hua Shen & Ting-Hsuan Chen, 2017. "Application of multi-level matching between financial performance and corporate social responsibility in the banking industry," Review of Quantitative Finance and Accounting, Springer, vol. 49(1), pages 29-63, July.
    8. Paradi, Joseph C. & Zhu, Haiyan, 2013. "A survey on bank branch efficiency and performance research with data envelopment analysis," Omega, Elsevier, vol. 41(1), pages 61-79.
    9. Fukuyama, Hirofumi & Weber, William L., 2010. "A slacks-based inefficiency measure for a two-stage system with bad outputs," Omega, Elsevier, vol. 38(5), pages 398-409, October.
    10. Stephen Brammer & Andrew Millington, 2008. "Does it pay to be different? An analysis of the relationship between corporate social and financial performance," Strategic Management Journal, Wiley Blackwell, vol. 29(12), pages 1325-1343, December.
    11. Constantinos Challoumis & Nicolaos Eriotis, 2024. "A historical analysis of the banking system and its impact on Greek economy," Edelweiss Applied Science and Technology, Learning Gate, vol. 8(6), pages 1598-1617.
    12. Mark P. Sharfman & Chitru S. Fernando, 2008. "Environmental risk management and the cost of capital," Strategic Management Journal, Wiley Blackwell, vol. 29(6), pages 569-592, June.
    13. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    14. Baron, David P. & Harjoto, Maretno A. & Jo, Hoje, 2009. "The Economics and Politics of Corporate Social Performance," Research Papers 1993r, Stanford University, Graduate School of Business.
    15. Kais Bouslah & Lawrence Kryzanowski & Bouchra M’Zali, 2018. "Social Performance and Firm Risk: Impact of the Financial Crisis," Journal of Business Ethics, Springer, vol. 149(3), pages 643-669, May.
    16. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yun-Chan Yen & Shih-Chih Chen, 2025. "The Triple Pathway to Loyalty: Understanding How Banks’ Corporate Social Responsibility Influences Customers via Moral Identity, Service Quality, and Relationship Quality," Sustainability, MDPI, vol. 17(7), pages 1-28, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gupta, Juhi & Kashiramka, Smita, 2024. "Examining the impact of liquidity creation on bank stability in the Asia Pacific region: Do ESG disclosures play a moderating role?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 91(C).
    2. Sadok El Ghoul & Omrane Guedhami & Hakkon Kim & Kwangwoo Park, 2018. "Corporate Environmental Responsibility and the Cost of Capital: International Evidence," Journal of Business Ethics, Springer, vol. 149(2), pages 335-361, May.
    3. Ben Lahouel, Béchir & Ben Zaied, Younes & Managi, Shunsuke & Taleb, Lotfi, 2022. "Re-thinking about U: The relevance of regime-switching model in the relationship between environmental corporate social responsibility and financial performance," Journal of Business Research, Elsevier, vol. 140(C), pages 498-519.
    4. Belasri, Sanaa & Gomes, Mathieu & Pijourlet, Guillaume, 2020. "Corporate social responsibility and bank efficiency," Journal of Multinational Financial Management, Elsevier, vol. 54(C).
    5. Sana Noor & Abubakr Saeed & Muhammad Saad Baloch & Muhammad Awais, 2020. "CSR permanency, family ownership, and firm value: Evidence from emerging economies," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(5), pages 2135-2149, September.
    6. Jinhua Cui & Hoje Jo & Manuel Velasquez, 2015. "The Influence of Christian Religiosity on Managerial Decisions Concerning the Environment," Journal of Business Ethics, Springer, vol. 132(1), pages 203-231, November.
    7. Fiordelisi, Franco & Ricci, Ornella & Santilli, Gianluca, 2023. "Environmental engagement and stock price crash risk: Evidence from the European banking industry," International Review of Financial Analysis, Elsevier, vol. 88(C).
    8. Francesco Gangi & Jérôme Méric & Rémi Jardat & Lucia Michela Daniele, 2019. "Business for society," Post-Print hal-02382307, HAL.
    9. Rashedul Hasan & Mohammad Dulal Miah & M. Kabir Hassan, 2022. "The nexus between environmental and financial performance: Evidence from gulf cooperative council banks," Business Strategy and the Environment, Wiley Blackwell, vol. 31(7), pages 2882-2907, November.
    10. Hojer, A. & Mataigne, V., 2024. "CSR in the banking industry: A longitudinal analysis of the impact on financial performance and risk-taking," Finance Research Letters, Elsevier, vol. 64(C).
    11. Bolognesi, Enrica & Burchi, Alberto, 2023. "The impact of the ESG disclosure on sell-side analysts’ target prices: The new era post Paris agreements," Research in International Business and Finance, Elsevier, vol. 64(C).
    12. Bouslah, Kais & Kryzanowski, Lawrence & M’Zali, Bouchra, 2013. "The impact of the dimensions of social performance on firm risk," Journal of Banking & Finance, Elsevier, vol. 37(4), pages 1258-1273.
    13. Saif-Alyousfi, Abdulazeez Y.H. & Saha, Asish & Alshammari, Turki Rashed, 2023. "Bank diversification and ESG activities: A global perspective," Economic Systems, Elsevier, vol. 47(3).
    14. Unsal, Omer, 2019. "Employee relations and firm risk: Evidence from court rooms," Research in International Business and Finance, Elsevier, vol. 48(C), pages 1-16.
    15. Emmanuel Adegbite & Yilmaz Guney & Frank Kwabi & Suleiman Tahir, 2019. "Financial and corporate social performance in the UK listed firms: the relevance of non-linearity and lag effects," Review of Quantitative Finance and Accounting, Springer, vol. 52(1), pages 105-158, January.
    16. Florian Neitzert & Matthias Petras, 2022. "Corporate social responsibility and bank risk," Journal of Business Economics, Springer, vol. 92(3), pages 397-428, April.
    17. Woon Leong Lin & Jo Ann Ho & Chin Lee & Siew Imm Ng, 2020. "Impact of positive and negative corporate social responsibility on automotive firms' financial performance: A market‐based asset perspective," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(4), pages 1761-1773, July.
    18. Ballester, Laura & González-Urteaga, Ana & Martínez, Beatriz, 2025. "When is environmental performance most valued? International evidence from the CDS market," International Review of Economics & Finance, Elsevier, vol. 99(C).
    19. Djalilov, Khurshid & Piesse, Jenifer, 2019. "Bank regulation and efficiency: Evidence from transition countries," International Review of Economics & Finance, Elsevier, vol. 64(C), pages 308-322.
    20. Lin, Woon Leong & Law, Siong Hook & Ho, Jo Ann & Sambasivan, Murali, 2019. "The causality direction of the corporate social responsibility – Corporate financial performance Nexus: Application of Panel Vector Autoregression approach," The North American Journal of Economics and Finance, Elsevier, vol. 48(C), pages 401-418.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jrisks:v:13:y:2025:i:1:p:10-:d:1564436. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.