The "Virtuous Circle" Between Corporate Social Performance and Corporate Financial Performance in the European Banking Sector

Abstract

This paper analyses the relationship between Corporate Social Performance (CSP) and Corporate Financial Performance (CFP) in the European banking sector. The good management approach and the slack resources approach have been tested, and the paper aims to verify the existence of a "virtuous circle" between the two performance measures. The econometric analysis, based on panel data, is performed on a sample of 71 listed banks (EU28) in the period between 2011 and 2015. The main findings show a positive influence of CSP on CFP, confirming the good management approach. However, the results demonstrate a negative influence of CFP on CSP, which generates the impossibility of confirming the theoretical assumptions of the slack resources approach. Therefore, the existence of a "virtuous circle" deriving from the integration of the two approaches is not supported.

Toward a Quadruple Bottom Line: Social Disclosure and Financial Performance in the Banking Sector

“…The ROAA (acronym for Return on Average Assets) is an indicator to assess the profitability of a company's assets and is used by banks and financial institutions as a tool to estimate financial performance [5,51,53,71,[84][85][86][87][88][89]. ROAA indicates the efficiency of a company in using its resources and is very useful for analyzing similar companies belonging to the same sector.…”

“…ROAA indicates the efficiency of a company in using its resources and is very useful for analyzing similar companies belonging to the same sector. This accounting-based performance measure is able to record the ability of banks to generate income based on the total capital employed: that is, returns generated from the assets financed by the banks [84,88]. ROAE (acronym for Return on Average Equity), on the other hand, is a profitability indicator aimed at measuring the performance of a company by evaluating the profit obtained on the basis of the money invested in the capital.…”

Adaptation of Green Banking Practices in Commercial Banks of Nepal

“…The results, however, show that CFP has a detrimental impact on CSP, making it unable to support the theoretical underpinnings of the spare resources strategy. Therefore, the idea that the merging of the two methodologies would result in a positive feedback loop is unsupported (Bussoli & Conte, 2018). Ahuja (2015) stated that, the phrase "Go Green" has gained popularity in today's eco-friendly society and is now applicable to every aspect of business.…”

The Impact on Corporate Financial Performance Vs Market Performance: Why Does This Matter in CSR Practices Disclosure?

“…Corporate social responsibility (CSR) has become a slogan in the business world of today, due to the pressing impact of globalization that demanded business organizations to Vol 13, Issue 11, (2023) E-ISSN: 2222-6990 contribute more meaningfully to all its stakeholders rather than solely to shareholder (Lu, Chau, Wang & Pan, 2014;Whalen, 2013). CSR which initially focused on environment and community has now expanded to two other dimensions, marketplace and workplace to cater for all the stakeholders of the organization (Bursa, 2006;Wissink, 2012). The significance of CSR performance to the business organization is indicated by the rising trend of CSR disclosure as 93% of largest companies globally are now reporting on CSR practices formally (KPMG, 2013).…”