Corporate social responsibility and financial performance in Islamic banks

Mallin, Christine, Farag, Hisham and Ow-Yong, Kean (2014) Corporate social responsibility and financial performance in Islamic banks. Journal of Economic Behavior and Organization, 103 (Supplement). S21-S38. ISSN 0167-2681

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This paper examines the relationship between corporate social responsibility (CSR) and financial performance in Islamic banks. Using a comprehensive CSR index covering ten dimensions, we analyse the CSR disclosures in a sample of 90 Islamic banks across 13 countries. The CSR disclosure index shows that Islamic banks engage across the range of social activities, both as individual banks and as countries. However Islamic banks seem to show more commitment to the vision and mission, the board and top management, and the financial product/services dimensions, whilst least attention is paid to the environment dimension. Islamic banks also show a considerable awareness of the mandatory disclosure recommendations of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) however, they pay less attention to the voluntary CSR disclosure. Moreover, we find a pronounced emphasis in Islamic banks strategy towards more universal disclosures, suggesting the legitimacy of these banks is reinforced through disclosure to the wider stakeholder community. The empirical analysis highlights a positive association between CSR disclosure and financial performance. We also find a positive and highly significant association between the Shari'ah supervisory board (SSB) size and CSR disclosure index. Finally, the results of the three-stage least squares estimation show that the causality between the two endogenous variables runs from financial performance to CSR disclosure. Thus CSR disclosure is determined by financial performance.

Item Type: Article
Uncontrolled Keywords: corporate social responsibility (csr),islamic banks,shari'ah supervisory board,social reporting,economics and econometrics,organizational behavior and human resource management,sdg 12 - responsible consumption and production ,/dk/atira/pure/subjectarea/asjc/2000/2002
Faculty \ School: Faculty of Social Sciences > Norwich Business School
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Depositing User: Pure Connector
Date Deposited: 13 Mar 2018 10:30
Last Modified: 21 Oct 2022 18:33
DOI: 10.1016/j.jebo.2014.03.001

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