Corporate Social-Environmental Performance versus Financial Performance of Banks in Central and Eastern European Countries

Abstract

Abstract:Developed market economies demonstrate a growing interest in issues concerning Corporate Social Responsibility (CSR) and its effects, confirmed by the sizeable theoretical and empirical literature on this issue. A substantial research proves also the positive relation between CSR commitment and financial results of banks in mature markets. However, there is less evidence on CSR existence and its impact in other geographical areas, especially in the research concerning Central and Eastern European Countries (CEEC). In our study we analyze the interrelation between being socially responsible and tangible financial outcome (Corporate Financial Performance-CFP) of banks in the CEEC. The aim is also to empirically verify the relation between efficiency of corporate social-environmental performance (CSP) and the efficiency of CFP for CEEC banks. In our study, we analyze the financial and CSP data of the biggest public banks in CEEC. The researched period is 2012-2016. The empirical part analyzes the interrelation between CSP and CFP based on the panel regression. Moreover, in order to evaluate the CSP efficiency and the CFP efficiency we use the Data Envelopment Analysis (DEA) approach. The empirical results reveal that in case of banks in the Central and Eastern Europe (CEE) region being socially responsible is not reflected in the bottom line. The financial condition of the banks also does not impact the CSR engagement. Our study confirms, however, that CEEC banks with better financial efficiency have higher efficiency of CSR activities. The conclusions may lead to the improved decision-making processes concerning CSR activities and their communication in banks in CEEC.

Environmental Risk Management Strategies and the Moderating Role of Corporate Social Responsibility in Project Financing Decisions

“…Corporate social responsibility has an impact on project financing. Banks that have better financial efficiency also maintain higher CSR efficiency [39].…”

Advancing the Sustainable Development Goals: Evidence from leading European banks

“…There are several alternative approaches in devising sustainability report contents (Fijałkowska, Zyznarska‐Dworczak, & Garsztka, ; Schaltegger & Wagner, ; Yongvanich & Guthrie, ) such as the Triple Bottom Line approach, the Intellectual Capital framework or the Balanced Scorecard. Yet the GRI set of guidelines is internationally accepted and constitutes the most widely acknowledged framework for sustainability/nonfinancial reporting.…”

“…Moreover, according to the same report, SDGs provide a unique opportunity for companies to create added value through developing, for example, products and services for consumers of low income, improving employees' well-being, as well as that of their contractors along with their suppliers' productivity output (UN Global Compact and KPMG International, 2015). There are several alternative approaches in devising sustainability report contents (Fijałkowska, Zyznarska-Dworczak, & Garsztka, 2018;Schaltegger & Wagner, 2006;Yongvanich & Guthrie, 2006) (Bondy & Starkey, 2012). It should be noted that the external/third-party assurance of sustainability disclosures is of critical importance in the GRI framework as it has a direct effect on the credibility and integrity of the overall nonfinancial accountability process.…”

Does Technological Innovation Drive Corporate Sustainability? Empirical Evidence for the European Financial Industry in Catching-Up and Central and Eastern Europe Countries

“…In addition, it is observed that most of the literature on sustainability in the financial industry, even though it is not related to innovation but to financial performance, is oriented to Western countries, being almost absent in Central and East Europe Countries (CEEC), as compared to developed countries and, therefore, more research in this field is also needed [12]. In fact, sustainability is said to significantly differ between Western and CEE countries (e.g., [13]) and sustainability studies in CEEC are scarce [12]. Countries from CEE are called catching-up or technology followers, using Castellacci's and Archiburgi's [14] term, those with relatively medium-high per capita incomes and relatively well-developed institutions, such as those from CEE countries.…”

“…Thus, our study is contextualized at the intersection of the literature on sustainability-oriented innovation [10,[15][16][17] in the financial industry [10] and in the particular case of catching-up and CEE countries that require further investigation on the topic [12]. This study's goal, therefore, consists of determining whether there is a relationship between innovation and corporate sustainability in the financial industry of catching-up and CEE countries, an exercise not yet accomplished.…”