Open AccessCorporate Social Responsibility and Bank Performance: A Co-integration Approach
Author(s) -
John Gartchie Gasti,
Joseph Ameyibor,
Edward Quansah
Publication year - 2019
Publication title -
journal of business and enterprise development
Language(s) - English
Resource type - Journals
ISSN - 2026-500X
DOI - 10.47963/jobed.2019.02
Subject(s) - corporate social responsibility , panel data , business , value (mathematics) , accounting , term (time) , financial system , monetary economics , economics , econometrics , political science , public relations , computer science , machine learning , physics , quantum mechanics
The aim of this study is to examine the short- and the long-run effects of Corporate Social Responsibility (CSR) on the performance of listed Ghanaian banks. An elongated balanced panel design with secondary data of 65 years’ bank observations spanning 2004 to 2016 was used for the study. A co-integration approach – Pooled Mean Group (PMG/Panel ARDL) – was used to examine the short- and the long-term effects of CSR on bank performance while controlling for bank variability, growth in interest income and bank size. The results were mixed. In the short term, it was found that CSR has positive but insignificant effect on bank performance (market-to-book value). In the long-term, however, CSR has significant negative effect on bank performance. Based on the findings, the study concludes that, in the long run, engaging in CSR reduces bank performance. Therefore, CSR needs to be carefully planned and implemented to serve as a boost to bank performance and not just regarded as an inconsequential addendum.