Impact of social welfare finance on institutional financial performance: Cross-country evidence

Abstract

This study explores the nuanced impact of social welfare finance on institutional financial performance, focusing solely on its direct effects. Utilizing fixed effect, feasible generalized, and quantitative approaches alongside the dynamic generalized method of moments (GMM), we conduct a thorough analysis using data from 20 upper-middle-income economies spanning 2000–2023. Our findings highlight the pivotal role of social welfare finance, including its dynamic and lagged impacts, as a significant determinant of institutional financial performance. Quantile analysis reveals varying effects across different quantiles, enriching our understanding. The results emphasize the direct influence of social welfare finance and unveil its indirect impact through Corporate Social Responsibility (CSR), a novel contribution to the literature. Moreover, we stress the critical importance of reasonable resource allocation, highlighting the indispensable role of social welfare finance resources. We advocate for prioritizing public-private partnerships to optimize financial targeting, offering a pragmatic strategy for fostering a resilient financial economy.