TY - JOUR

T1 - Responsible risk-taking and the CSP-financial performance relation in the banking sector: A mediation analysis

AU - Conte, Danilo

AU - Bussoli, Candida

AU - Hemmings, Danial

PY - 2024/4

Y1 - 2024/4

N2 - In this study, a mediation analysis is conducted using data for 394 banks listed in 54 countries from 2002 to 2017 with the aim to investigate the role of bank risk-taking as a mediation channel to explain the CSP–financial performance relationship in the banking sector. Results show that stronger CSP is associated with improved financial performance and this relationship is partially mediated by bank risk-taking, with CSP increasing financial performance through the reduction of bank risk. Adopting more prudent—less risky or speculative—banking practices is a key method through which banks can embody social responsibility, given the systemic importance of bank stability. However, such banks tend to be more financially successful. The empirical results are consistent across various robustness checks, thereby supporting to the notion that corporate social responsibility (CSR) engagement helps banks to achieve a “win-win” situation—more profitable yet more responsible and less risky banks.

AB - In this study, a mediation analysis is conducted using data for 394 banks listed in 54 countries from 2002 to 2017 with the aim to investigate the role of bank risk-taking as a mediation channel to explain the CSP–financial performance relationship in the banking sector. Results show that stronger CSP is associated with improved financial performance and this relationship is partially mediated by bank risk-taking, with CSP increasing financial performance through the reduction of bank risk. Adopting more prudent—less risky or speculative—banking practices is a key method through which banks can embody social responsibility, given the systemic importance of bank stability. However, such banks tend to be more financially successful. The empirical results are consistent across various robustness checks, thereby supporting to the notion that corporate social responsibility (CSR) engagement helps banks to achieve a “win-win” situation—more profitable yet more responsible and less risky banks.

KW - Corporate Social Performance

KW - Bank financial performance

KW - Responsible risk-taking

KW - Sustainable banking

KW - Mediation analysis

KW - Stakeholders

U2 - 10.1016/j.ribaf.2024.102293

DO - 10.1016/j.ribaf.2024.102293

M3 - Article

VL - 69

JO - Research in International Business and Finance

JF - Research in International Business and Finance

SN - 0275-5319

M1 - 102293

ER -