The influence of corporate social responsibility and social values on bank performance : a global study

This study responds to the need for deeper empirical investigation into the relationship between corporate social responsibility (CSR) and financial performance in the banking industry. Specifically, it investigates whether and how CSR performance and social values influence bank performance. Furthermore, it explores the moderating role of social values on the CSR and bank performance relationship. To address these research questions, we use the generalized method of moments estimator technique described by Arellano and Bover (1995) and analyze a sample of 3139 banks worldwide over the period 2010-2020. Dividing the countries into two groups based on their income level, that is, middle- and high-income countries, we show a positive association between CSR and bank performance. Furthermore, we illustrate that all dimensions of national culture have a positive impact on bank performance. The results on the moderating role of social values in the relationship between CSR and bank performance indicate that, in societies with higher indulgence, uncertainty avoidance, and a long-term orientation, increasing CSR performance has a positive impact on bank performance. However, the relationship between CSR and bank performance is stronger in countries that are low in individualism, masculinity, and power distance than in countries that are high in individualism, masculinity, and power distance. These results vary widely across levels of country income in terms of the significance, sign, and size of the effect. Nonetheless, our findings have important implications for regulators, managers, and scholars that highlight the influence of social values on the effectiveness of legal settings and regulations on financial performance. Specifically, this research is particularly useful for scholars and practitioners in finance and CSR, suggesting that customizing CSR strategies to align with local social values can enhance financial performance.