Measuring corporate social responsibility in Islamic banking: what matters?

Abstract

PurposeThis paper begins with a challenge to explore the scope and dimensions of corporate social responsibility (CSR) in Islamic banking and design a CSR disclosure index, which may gauge the level of CSR disclosure in Islamic banking.Design/methodology/approachIt adopts a two-fold approach to develop the CSR disclosure index for Islamic banking, such as “identification” and “prioritization.” In the ambit of identification, it relies on the existing literature related to CSR and Islamic banking. However, it undertakes analytical hierarchy process (AHP) method for prioritization through the sample of 104 experts related to Islamic banking of Pakistan.FindingsIt concludes the CSR index for Islamic banking contains five dimensions, including 79 items across 20 sub-dimensions. The results of AHP indicate that the CSR dimensions are important for Shariah governance, employee, community, customer and environment. Moreover, within dimensions, the most important sub-dimensions are Shariah compliance, customer service and quality, green investing/banking, customer relationship, training and development and poverty alleviation.Practical implicationsThe CSR disclosure index of this study has important implications for academicians, such as it paves the ways for further investigations and practical usage of index to gauge the level CSR disclosure of Islamic banking. Moreover, it delineates the spectrum of responsibilities for managers of Islamic banking under the domain of CSR.Originality/valueThe proposed CSR disclosure index is comprehensive and stresses on the social responsibility of Islamic banking toward stakeholders. In nutshell, this study offers what is expected from the practitioners of Islamic banking in the domain of social responsibility.