CSR scores versus actual impacts: Banks’ main street lending during the great recession

Dong Beom Choi and Seongjun Jeong

Journal of Banking & Finance, 2025, vol. 172, issue C

Abstract: We examine the relationship between banks’ corporate social responsibility (CSR) scores, measured at the peak of the boom, and their lending behaviors during the Great Recession. High-CSR banks, expected to better support local borrowers during critical periods, instead reduced small business lending more sharply than their low-CSR counterparts. This paradox arises from CSR scores’ emphasis on visible but less material attributes, such as employee benefits, which are easier to measure during booms but deplete financial slack necessary for sustained lending under stress. Our findings highlight a misalignment between CSR metrics and material social impacts, underscoring the need for more reliable performance measures to implement stakeholderism effectively.

Keywords: Corporate social responsibility; Stakeholder theory; Bank lending; Social impact assessment; Credit crunch; Great recession (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:172:y:2025:i:c:s0378426625000019

DOI: 10.1016/j.jbankfin.2025.107380

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