The Effect of Corporate Social Responsibility on Bank Efficiency in Developed Countries

Abstract

This study aims to investigate the effect of CSR on bank cost efficiency. Based on an international sample of 87 banks in 20 developed countries over 2005-2018 periods, we apply stochastic frontier estimation procedures to compute bank cost efficiency. In the second stage regression, we use Feasible Generalized Least Square (FGLS) to measure the influence of CSR on bank cost efficiency. Our empirical investigation reveals that CSR has a positive significant impact on bank cost efficiency. The investigation also finds that the effect of CSR on bank efficiency become not significant during crisis period. In addition, we find that CSR performance increased during crisis, while the bank efficiency decreased.