The Role of Corporate Social Responsibility in the International Banking Sector

We study the role of corporate social responsibility (CSR) in the international banking industry. We first investigate whether there are significant differences in accounting and market variables between two groups of banks: CSR banks and non-CSR banks. To this end we perform t-tests for the equality of means on a large sample of banks over the period 2004–2013. Second, we try to detect whether there is a particular pattern of environmental, social and corporate governance (ESG) scores over time and especially whether the financial crisis had an impact on the ESG scores. We find that CSR banks, compared with non-CSR banks, are larger, more profitable, more efficient, more leveraged and provided with greater liquidity buffers. The ESG scores, especially those relating to environmental and corporate governance performance, improve in the post-crisis period, suggesting that CSR is being used as a tool to manage the consequences of the crisis.