Relationship among CSR Initiatives and Financial and Non-Financial Corporate Performance in the Ecuadorian Banking Environment

Ana Belen Tulcanaza-Prieto,Chang Lee,Hokyun Shin,Younghwan Lee

doi:10.3390/su12041621

Abstract

This study explores the relationship between corporate performance and corporate social responsibility (CSR) initiatives in the Ecuadorian banking environment. The first model employs both return on assets and return on equity as proxy for the financial performance while the second model includes the non-financial corporate performance constructs collected by a self-designed online questionnaire. We found a statistically positive relationship among CSR initiates and the financial and non-financial indicators in corporate performance. Our findings revealed that economic, legal, ethical, and philanthropic responsibility initiatives positively affect the non-financial corporate performance of the Ecuadorian banking environment. Similarly, the non-financial corporate performance is significantly positively influenced by the customer’s brand trust, customer’s brand loyalty, customer’s perception of quality, and customer satisfaction. Study results are mostly consistent with the banking environment of other countries, especially in Bangladesh, Pakistan, and Lebanon. Customers of the Ecuadorian banking environment perceived banks as socially responsible entities and Ecuadorian banks invest resources in CSR activities as a corporate governance policy to increase their financial and non-financial performance. Future research should include a corporate governance index with a CSR component as an independent variable to increase statistical models’ power.

Highlights

Corporate social responsibility (CSR) faces a pivotal management phenomenon in the business literature, combining the notion of customer-based and corporate-level management [1], while CSR activities have been used to address consumers’ social concerns, create a favorable image, and develop a positive relationship with consumers and stakeholders [2]
We found that economic, legal, ethical, and philanthropic responsibilities initiatives present an individual significant positive relationship with non-financial corporate performance in the Ecuadorian banking industry
We analyzed the relationship between corporate performance and CSR initiatives in the Ecuadorian banking industry

Summary

Introduction

Several public and private institutions recognized that CSR plays an important role in the moral failure of the financial system, which affects directly the banking system’s reputation and the effective and efficient communication with their stakeholders, classified into three basic groups: Customers, employees, and community [4]. All these factors positively influence earnings, faith, trust, and customer retention of the banking industry [3,5,6]. Banks and financial organizations adopt CSR practices to be beneficial for society and sustainable economic development

Objectives

Results

Conclusion