EconPapers    
Economics at your fingertips  
 

The Cost of Corporate Social Responsibility: The Case of the Community Reinvestment Act

Donald Vitaliano () and Gregory Stella
Additional contact information
Gregory Stella: The University at Albany, Albany, NY, USA

Rensselaer Working Papers in Economics from Rensselaer Polytechnic Institute, Department of Economics

Abstract: A Data Envelopment Analysis (DEA) cost minimization model is employed to estimate the cost to thrift institutions of achieving a rating of 'Outstanding' under the anti-redlining Community Reinvestment Act, which is viewed as an act of voluntary Corporate Social Responsibility (CSR). There is no difference in overall cost efficiency between 'Outstanding' and minimally compliant 'Satisfactory' thrifts. However, the sources of cost inefficiency do differ, and an 'Outstanding' rating involves annual extra cost of $7.4 million or, 1.3% of total costs. This added cost is the shadow price of CSR since it is not an explicit output or input in the DEA cost model. Before and After-tax rates of return are the same for the 'Outstanding' and 'Satisfactory' thrifts, which implies a recoupment of the extra cost. The findings are consistent with CSR as a management choice based on balancing marginal cost and marginal revenue. An incidental finding is that larger thrifts are less efficient

JEL-codes: M14 G28 D21 (search for similar items in EconPapers)
Date: 2004-06
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)
http://www.economics.rpi.edu/workingpapers/rpi0412.pdf (application/pdf)

Related works:
Journal Article: The cost of Corporate Social Responsibility: the case of the Community Reinvestment Act (2006) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rpi:rpiwpe:0412

Access Statistics for this paper

More papers in Rensselaer Working Papers in Economics from Rensselaer Polytechnic Institute, Department of Economics Contact information at EDIRC.
Series data maintained by Shawn Kantor (). This e-mail address is bad, please contact .

 
Page updated 2017-11-16
Handle: RePEc:rpi:rpiwpe:0412