Corporate social responsibility disclosure and profitability: Evidence from Islamic banks working in Yemen

Nabil Ahmed Mareai Senan,Eissa A Al-Homaidi,Aida Abdulaziz Ali Noaman,Borhan Omar Ahmad Al-Dalaien

doi:10.21511/bbs.16(2).2021.09

Abstract

This study aims to examine the influence of corporate social responsibility (CSR) disclosure determinants on profitability of Yemeni Islamic financial institutions. The empirical study was based on a balanced panel for twelve years from 2005 to 2016. Banks’ profitability is measured by four indicators such as return on assets (ROA), return on equity (ROE), profit after tax (PAT), and earnings per share (EPS), while corporate social responsibility, financial leverage, inflation rate, asset size, and age of Islamic banks are considered as independent variables. The results of this study with regard to ROA indicated that corporate social responsibility, asset size, inflation rate, and age of Islamic banks have a significant influence on profitability (ROA). With respect to ROE, the result indicated that financial leverage, asset size, and inflation rate are the most important variables affecting bank profitability (ROE). Concerning PAT, the outcome revealed that financial leverage and age of Islamic banks have a significant effect on profitability (PAT). Finally, the result with respect to EPS indicated that financial leverage, asset size, inflation rate, and age of Islamic banks have a significant impact on bank profitability (EPS). The result will be beneficial to scholars, investors, stakeholders, managers, and policymakers in the Islamic financial sector.

Highlights

According to the growing public concern about corporate impacts on society and the environment, “corporate social responsibility” (CSR) disclosure and social reporting have become a crucial issue for many companies
The results of this study with regard to return on assets (ROA) indicated that corporate social responsibility, asset size, inflation rate, and age of Islamic banks have a significant influence on profitability (ROA)
The result with respect to earnings per share (EPS) indicated that financial leverage, asset size, inflation rate, and age of Islamic banks have a significant impact on bank profitability (EPS)

Summary

Introduction

According to the growing public concern about corporate impacts on society and the environment, “corporate social responsibility” (CSR) disclosure and social reporting have become a crucial issue for many companies. Corporate social responsibility has been around for decades and is rising at an incredible rate with no signs (Quazi et al, 2015). 308) have led to an increased number of firms getting involved in preparing CSR sustainability reports published. Avoiding unethical behavior and obtaining ‘social authorization’ (Gunningham et al, 2004, p. 308) have led to an increased number of firms getting involved in preparing CSR sustainability reports published.

Objectives

Results

Conclusion