Corporate social responsibility (CSR) practices in Islamic banks of Bangladesh

Abstract

Purpose Corporate social responsibility (CSR) influences an organization in deciding its ethical approaches in the corporate practices and also important to maintain sustainable development. Islamic banks are capturing almost 40% of the total bank account holders in Bangladesh and contributing to the socio-economic and environmental development of the country through their CSR activities. The purpose of this paper is to investigate the impacts of CSR activities of Islamic banks for sustainable development in Bangladesh from the perception of the beneficiaries. Design/methodology/approach This study is based on a questionnaire survey of 200 conveniently selected beneficiaries from five purposively selected Islamic banks in Bangladesh. Respondents’ agreement score for various CSR-related activities has been observed in a five-point Likert scale and, finally, to identify the impact of CSR, exploratory factor analysis has been done. Findings Results revealed that respondents are expressing strong agreement for almost all the activities, and they are much satisfied with ongoing CSR activities by Islamic banks, which implies positive attitudes of beneficiaries regarding CSR activities. The results of factor analysis further confirm the perception of respondents toward CSR activities of Islamic banks in terms of social enhancement, education and health, socio-economic well-being and contemporary arts and culture. Originality/value The Islamic banks should enhance their CSR activities for socio-economic development, provide more allocation in education programs, increase sponsorship in sports events and assist in flourishing Bangladeshi arts and culture.

Islamic Banking Performance: How Far has It been Reviewed?

“…Mohd Sofian & Muhamad (2020) unraveled the relationship between the integrated Islamic CSR index and the financial performance of Malaysian Islamic banks. Other studies in this line of research that are more updated can for example be seen in Khemiri et al, (2024), Umar et al, (2023), Chouaibi et al, (2023), Aslam et al, (2023), andBhuiyan et al, (2022).…”

Corporate Social Responsibility and Financial Performance in Shariah Banks: A Review

“…Financial resources and costs are often associated with CSR projects, which can have a short-term impact on a company's financial performance (Bhuiyan et al, 2022). Achieving financial sustainability while meeting social and environmental obligations requires careful allocation of resources between CSR efforts and core business operations.…”

“…The board of directors plays a vital role in establishing CSR initiatives, overseeing performance, and ensuring congruence with the bank's goals objectives. The management of risks associated with CSR has substantial consequences for a bank's long-term sustainability and financial performance (Bhuiyan et al, 2022). By integrating CSR into risk management frameworks, the bank can effectively recognize, evaluate, and mitigate potential risks related to social, environmental, and ethical considerations (Mustofa et al, 2020).…”

“…Nevertheless, the correlation between corporate social responsibility (CSR) and financial performance in Shariah-compliant banks is complex. Corporate social responsibility (CSR) programs possess the capacity to augment financial performance; yet, they also present some problems (Bhuiyan et al, 2022). Shariah-compliant banks are required to effectively manage the intersection of their societal obligations and financial objectives, thereby guaranteeing that their corporate social responsibility initiatives adhere to the tenets of Islamic finance while maintaining profitability and competitiveness (Probohudono et al, 2022).…”

Bank Employee Perceptions of Corporate Social Responsibility Practices: Evidence from Egypt

“…Finally, some studies sought to provide a detailed examination of the status of CSR as practiced and reported in developing countries (see, for example, [60] in Malaysia; [61] in Ireland; [17,62] in Bangladesh; [63] in Pakistan; [18] in Tunisia; [19] in Lebanon; [64] in Poland; [20] in Kazakhstan; and [65] in Nigeria). In particular, Hamid [60] examined CSR adoption by Malaysian banks, finding that disclosures on products/services are more frequent than those disclosures related to environmental and energy, human resources, and community.…”