Does CSR Engagement Affect Banking Efficiency in the Context of a Stochastic Cost Frontier?

Abstract

This paper examines the effect of corporate social responsibility (CSR) on the cost efficiency of banks across countries with the measure of CSR compiled from the EIRIS database. We consider CSR as an environmental variable, which allows us to associate CSR with cost efficiency. The empirical results fail to support the greenwashing hypothesis, but partially support the altruistic and strategic motives. Since it takes time for a bank to achieve a higher CSR score, a bank tends to be altruistic in the short-run, while a bank tends to be strategic in the long-run.