Application of multi-level matching between financial performance and corporate social responsibility in the banking industry

Meng-Wen Wu, Chung-Hua Shen () and Ting-Hsuan Chen
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Meng-Wen Wu: National Taipei University
Chung-Hua Shen: Shih Chien University
Ting-Hsuan Chen: National Taichung University of Science and Technology

Review of Quantitative Finance and Accounting, 2017, vol. 49, issue 1, No 2, 29-63

Abstract: Abstract This study applies a new matching method to examine the old yet debatable idea that high corporate social responsibility (CSR) is associated with improved bank financial performance (FP). The conventional matching method focuses on one treatment effect. Thus, the old method is considered inappropriate when banks exhibit various degrees of CSR. To address this problem, we first apply the new multi-level matching method to multi-degree CSR and therefore contribute to studies that consider multi-degree CSR without adopting a multi-level matching method. We propose that “the more CSR, the better the FP,” which implies that banks engaged in more CSR exhibit better FP. Results before and after the matching significantly differ. CSR insignificantly influences bank FP before matching, but CSR has a strongly positive influence on bank FP after matching. Such effect on bank FP is further strengthened when banks increase their CSR activities, which supports our argument.

Keywords: Corporate social responsibility; Multi-level CSR; Multi-level matching; Adjusted performance (search for similar items in EconPapers)
JEL-codes: C31 C52 G21 M14 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (18)

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DOI: 10.1007/s11156-016-0582-0

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