Relationship between Corporate Social Responsibility and Bank Performance of Listed Banks in Vietnam

Abstract

The good implementation of social responsibility by businesses not only helps the bank to develop sustainably but also contributes to the sustainable development of society. This research aims to investigate the relationship between social responsibility and commercial bank performance in Vietnam, specifically, to determine the magnitude and trend of factors' impact on profitability. Then, provide implications for solutions to strengthen the bank's social responsibility initiatives while also increasing the bank's profitability. The research investigated the impact of corporate social responsibility on bank performance in Vietnam by collecting secondary data from 17 banks listed on two exchanges, HOSE and HNX, from 2015 to 2020 in Vietnam. The findings show that most banks in Vietnam are giving more and more attention to corporate social responsibility activities, with all banks paying special emphasis to human resource activities. Quantitative research results have shown that bank performance is related to financial leverage, bank size, and social responsibility activities related to human resources. Three groups of related solutions have been proposed to increase the bank's performance from the research results. The research novelty lies in the relationship between corporate social responsibility and bank performance of listed banks.

The Effect of Corporate Social Responsibility, Credit Risk, and Leverage on the Financial Performance of Commercial Banks in Indonesia

“…The negative coefficient value indicates that CSR has a negative influence on ROE. This study's results do not follow research conducted by [17] but pursue research conducted by [20]. The negative effect of CSR is that these activities incur costs first before they show their value and benefits to the financial performance of banks.…”

“…Research in Vietnam shows the same results, namely that Bank size has a significant positive effect on banking profitability. This is because banks with larger assets will be better able to increase the customer base, making it easier to mobilize capital [20]. Research in South Asia which includes bank size as a control variable shows that bank size, which is described by the natural logarithm of total assets, has a significant positive effect on financial performance as defined by ROA and ROE [23].…”

Corporate Social Responsibility Disclosures: Evidence from Vietnamese Banks

“…Because of their importance to the economy, banks' objectives are not limited to profit but include the overall development of the economy and society (Jones et al, 2016). In addition, activities of the banking industry attract great attention from the community because the banks' business mainly relies on their clients' trust (My & My, 2022). Thus, ethics and trustworthiness are critical for the existence and development of banks.…”

“…However, despite the rising interest in CSR disclosures, there is still a dearth of research on this topic in Vietnam, especially in the banking industry. Previous studies have focused mainly on identifying the determinants of CSR (Tran et al, 2020) or on the CSR disclosures of listed firms or on the impact of CSR disclosures on the firm's financial performance (Oanh et al, 2021;My & My, 2022). Limited research (Tran et al, 2020;My & My, 2022), has been conducted on evaluating or assessing CSR information disclosures in the banking industry.…”

“…Previous studies have focused mainly on identifying the determinants of CSR (Tran et al, 2020) or on the CSR disclosures of listed firms or on the impact of CSR disclosures on the firm's financial performance (Oanh et al, 2021;My & My, 2022). Limited research (Tran et al, 2020;My & My, 2022), has been conducted on evaluating or assessing CSR information disclosures in the banking industry. Either the number of Vietnamese banks investigated is insufficient or the aspects of CSR information mentioned in the study are inconsistent.…”