Does Corporate Social Responsibility Affect the Cost of Bank Loans? Evidence from China

Jun Huang, Zhixin Duan and Guowei Zhu

Emerging Markets Finance and Trade, 2017, vol. 53, issue 7, 1589-1602

Abstract: This article examines the link between corporate social responsibility (CSR) and cost of bank loans (CBL) in China. We find that there exists an inverse U-shape relationship between CSR and CBL. In addition, CSR threshold for state-owned enterprises (SOEs) is higher than for non-SOEs. In particular, CSR threshold for SOEs is lower in regions with high degree of marketization than in regions with low degree of marketization. The findings indicate that value-destroying effect occurs during CSR underinvestment phase, which is different from the overinvestment view. Moreover, the effect of CSR on CBL also depends on contextual factors such as firm ownership and marketization level.

Date: 2017
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DOI: 10.1080/1540496X.2016.1179184

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