Corporate social responsibility, financial globalization and bank soundness in Europe – Novel evidence from a GMM panel VAR approach

Brahim Gaies and Abderrahmane Jahmane

Finance Research Letters, 2022, vol. 47, issue PB

Abstract: Based on macro and micro perspectives, this paper is a pioneering effort to study the causal relationship between corporate social responsibility (CSR), bank soundness (profitability, stability) and financial globalization in the European banking sector. The results show that CSR performance enhances bank stability, while the financial costs of CSR can reduce bank profitability. We also reveal a virtuous circle between financial globalization and bank soundness, as well as a positive effect of financial globalization on CSR. However, the divergence between local and foreign CSR practices in the banking sector can hinder the financial integration process.

Keywords: Financial globalization; Financial instability; Endogeneity; Slack resources theory; Good management theory (search for similar items in EconPapers)
JEL-codes: F41 F64 F65 G28 G33 M14 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:47:y:2022:i:pb:s154461232200085x

DOI: 10.1016/j.frl.2022.102772

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