Corporate Social Responsibility Disclosure and Firm’s Productivity: Evidence from the Banking Industry in Bangladesh
Abstract
:1. Introduction
2. Literature Review
CSR and Firm Productivity
3. Research Methodology
3.1. Sample Size and Data
3.2. Estimating Productivity: The Malmquist Productivity Index (MPI)
- MPI > 1 indicates positive change,
- MPI < 1 indicates negative change.
- Dcrs = constant output function,
- Dvrs = variable output function.
3.3. Dependent Variable
3.4. Independent Variable
3.5. Control Variables
3.6. Data Estimation Model
4. Results Analysis and Discussion
4.1. Total Factor Productivity
4.2. Descriptive Analysis
4.3. Correlation
4.4. Multicollinearity Test
4.5. Regression Analysis
4.6. Robustness Analysis
4.7. Additional Tests
4.8. Endogeneity Issue
4.8.1. Two-Stage Least Square (2SLS)
4.8.2. Two-Step System Generalized Method of Moments (GMM)
5. Conclusions
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Acknowledgments
Conflicts of Interest
Appendix A
Variables | Elaborations | Definitions and Measurement |
---|---|---|
Outputs | ||
Interest Income | Interest income | Income from interest |
Non-interest income | Non-interest income | Income generated from non-core activities |
Loan | Loan | The portion of the deposit that has been lent to the borrower |
Inputs | ||
Interest exp | Interest expense | Interest payable on borrowings |
Non-interest exp | Non-interest expense | Expenses other than interest payments on deposits and bonds |
Assets | Total assets | Any resource owned by a business or an economic entity |
Deposit | Total deposits | The fund is collected from depositors |
Dependent variable | ||
TFP | Total factor productivity | The ratio of aggregate output to aggregate inputs |
Independent variables | ||
CSRDI | CSR disclosure index | CSRDI is developed under two common approaches: one is awarding an equal point for all items taking the scores of “1” if a company discloses its CSR items, and “0” otherwise; and another is providing three points for monetary disclosures, two points for quantitative but non-monetary disclosures, and one point for nonquantitative disclosure items. |
CSRE | CSR expenditure | The total amount of CSR spending by each of the sample banks |
Additional variables | ||
GRI | Global Reporting Initiatives | If a firm prepares a sustainability report following GRI guidelines, it is coded as 1; otherwise, it is coded as 0 |
PC | Political connection | If a bank has a politician or his/her family members as a major shareholder or a director, it is coded as 1; otherwise, it is coded as 0 |
ISLAMIC | Islamic banks | If a bank complies with Shariah completely, it is coded as 1; otherwise, it is coded as 0 |
Control variables | ||
ROA | Return on assets | Net income divided by total assets |
ROE | Return on equity | Net income divided by total equity |
AGE | Firm’s age | Number of years in business |
LEV | Leverage | Total long-term debt divided by total assets |
AUDIT | Audit committee team members | Number of members in the audit committee |
AE | Accounting experts | Number of accounting experts on the board who hold professional degrees like CA and CMA |
BIG4 | Audit quality | This is calculated as a dummy variable set to 1 if one of the BIG4 companies audits the bank and 0 otherwise. |
Appendix B
ID | Bank Name | 2011–12 | 2012–13 | 2013–14 | 2014–15 | 2015–16 | 2016–17 | 2017–18 | Average |
---|---|---|---|---|---|---|---|---|---|
1 | Rupali Bank | 0.842 | 0.923 | 1.193 | 1.023 | 0.764 | 1.054 | 0.625 | 0.918 |
2 | AB Bank | 0.974 | 0.837 | 1.11 | 1.037 | 0.936 | 1.059 | 1.018 | 0.996 |
3 | Al Arafah Islami Bank | 0.94 | 0.964 | 1.003 | 1.001 | 0.991 | 2.255 | 0.481 | 1.091 |
4 | Bank Asia | 0.926 | 0.943 | 0.989 | 0.973 | 1.056 | 1.077 | 1.032 | 0.999 |
5 | BRAC Bank | 1.045 | 1.056 | 0.985 | 1.056 | 1.126 | 1.002 | 0.866 | 1.019 |
6 | Dhaka Bank | 0.897 | 0.95 | 0.895 | 0.957 | 1.009 | 1.034 | 1.099 | 0.977 |
7 | DBBL | 0.945 | 0.994 | 1.047 | 1.122 | 1.125 | 1.207 | 1.015 | 1.065 |
8 | Eastern Bank | 0.969 | 0.85 | 1.036 | 0.995 | 1.02 | 1.013 | 1.003 | 0.984 |
9 | Exim Bank | 0.973 | 1.015 | 0.963 | 0.973 | 0.949 | 1.003 | 1.043 | 0.988 |
10 | FSIB | 0.979 | 0.949 | 0.989 | 0.944 | 0.987 | 0.999 | 1.054 | 0.986 |
11 | ICB | 0.859 | 0.554 | 1.049 | 1.073 | 1.043 | 0.976 | 0.987 | 0.934 |
12 | IFIC | 0.965 | 0.843 | 1.018 | 1.067 | 1.000 | 1.011 | 1.016 | 0.989 |
13 | IBBL | 0.956 | 0.903 | 1.068 | 1.098 | 1.057 | 1.026 | 1.008 | 1.017 |
14 | Jamuna | 0.871 | 0.955 | 0.919 | 1.029 | 1.077 | 1.048 | 1.023 | 0.989 |
15 | Markentile | 0.689 | 1.028 | 0.994 | 0.992 | 1.027 | 1.017 | 0.984 | 0.962 |
16 | MTBL | 0.613 | 1.079 | 0.977 | 0.91 | 0.941 | 0.958 | 1.047 | 0.932 |
17 | National Bank | 0.815 | 0.929 | 0.901 | 0.993 | 1.033 | 1.04 | 1.076 | 0.970 |
18 | NCC | 0.937 | 0.86 | 0.936 | 0.992 | 1.023 | 0.994 | 1.017 | 0.966 |
19 | One Bank | 0.927 | 0.975 | 1.010 | 0.937 | 0.968 | 1.051 | 1.042 | 0.987 |
20 | Premier Bank | 0.967 | 0.853 | 0.953 | 1.043 | 1.038 | 1.036 | 1.068 | 0.994 |
21 | Prime Bank | 1.652 | 0.49 | 0.886 | 1.019 | 1.089 | 1.096 | 3.333 | 1.366 |
22 | Pubali Bank | 0.926 | 0.831 | 0.996 | 1.049 | 1.057 | 1.042 | 0.988 | 0.984 |
23 | Shahjalal Islami Bank | 1.026 | 0.893 | 0.876 | 0.97 | 1.035 | 1.04 | 1.005 | 0.978 |
24 | Social Islami Bank | 0.922 | 1.042 | 0.933 | 1.053 | 0.996 | 0.989 | 1.04 | 0.996 |
25 | Southeast Bank | 1.099 | 0.694 | 0.937 | 0.988 | 0.968 | 1.057 | 1.023 | 0.967 |
26 | Standard Bank | 0.953 | 0.882 | 0.959 | 0.902 | 0.944 | 1.068 | 1.019 | 0.961 |
27 | City Bank | 0.99 | 0.882 | 1.044 | 1.005 | 0.968 | 1.091 | 1.055 | 1.005 |
28 | Trust Bank | 0.884 | 1.089 | 1.085 | 1.008 | 0.925 | 1.154 | 0.972 | 1.017 |
29 | United Commercial Bank | 1.013 | 1.01 | 1.02 | 0.998 | 0.966 | 1.022 | 0.848 | 0.982 |
30 | Uttara Bank | 0.957 | 0.546 | 1.052 | 0.997 | 0.976 | 1.043 | 1.086 | 0.951 |
Average | 0.95 | 0.89 | 0.99 | 1.01 | 1.00 | 1.08 | 1.06 | 1.00 |
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Variables | Obs. | Mean | Std. Dev. | Min | Max |
---|---|---|---|---|---|
TFP | 210 | 1.00 | 0.22 | 0.481 | 3.333 |
Int. income | 240 | 15,682.52 | 8584.01 | 351 | 67,166 |
Non-int. income | 240 | 2908.83 | 1841.80 | 64.9 | 8981.1 |
Loan | 240 | 146,130.30 | 98,987.83 | 8633 | 805,759 |
Int. exp | 240 | 10,765.07 | 5443.36 | 338 | 37,999 |
Non-int. exp | 240 | 8992.60 | 50,659.29 | 455.39 | 705,648.9 |
Assets | 240 | 213,068.60 | 127,874.70 | 11429 | 997,430 |
Deposit | 240 | 168,172.10 | 106,411.80 | 10,893.98 | 822,573 |
CSRD | 210 | 17.11 | 1.88 | 11 | 21 |
ROA | 210 | 0.79 | 1.12 | −7.02 | 2.81 |
ROE | 210 | 10.9 | 4.88 | −7.62 | 23.4 |
AE | 210 | 1.07 | 1.41 | 0 | 8 |
AUDIT | 210 | 4.43 | 0.95 | 3 | 6 |
AGE | 210 | 24.00 | 9.63 | 11 | 46 |
GRI | 210 | 0.4 | 0.49 | 0 | 1 |
PC | 210 | 0.47 | 0.50 | 0 | 1 |
TFP | CSRD | AUDIT | AE | ROA | LEV | AGE | |
---|---|---|---|---|---|---|---|
TFP | 1 | ||||||
CSRD | 0.164 ** | 1 | |||||
AUDIT | 0.065 | −0.145 ** | 1 | ||||
AE | 0.035 | −0.201 *** | 0.158 ** | 1 | |||
ROA | −0.015 | 0.218 *** | −0.027 | −0.187 *** | |||
LEV | −0.143 ** | 0.301 *** | −0.138 ** | 0.163 ** | 0.040 | 1 | |
AGE | −0.040 | −0.145 ** | 0.026 | 0.426 *** | −0.232 *** | 0.204 *** | 1 |
(1) | (2) | (3) | (4) |
---|---|---|---|
VIF | TFP | TFP | |
CSRD | 1.57 | 0.171 ** | 0.133 ** |
(0.073) | (0.054) | ||
ROA | 1.24 | −0.305 | −0.579 |
(1.458) | (1.481) | ||
LEV | 1.26 | −0.179 ** | −0.178 ** |
(0.085) | (0.084) | ||
AGE | 1.38 | −0.011 | −0.007 |
(0.016) | (0.017) | ||
AE | 1.36 | 0.067 | 0.071 |
(0.074) | (0.074) | ||
AUDIT | 1.04 | 0.007 | 0.005 |
(0.005) | (0.005) | ||
Year dummy | Yes | Yes | |
Constant | 1.009 *** | 1.030 *** | |
(0.096) | (0.092) | ||
N | 210 | 210 | |
F | 1.462 | 1.509 | |
r2 | 0.082 | 0.084 | |
r2_a | 0.026 | 0.028 |
(1) | (2) | (3) | (4) | (5) | (6) |
---|---|---|---|---|---|
TFP | TFP | ROA | ROE | TFP | |
CSRD | 0.165 *** | 0.011 *** | 0.005 *** | ||
(0.055) | (0.002) | (0.001) | |||
CSRE | 0.012 ** | ||||
(0.006) | |||||
ROA | −0.272 | 0.102 | −0.288 | ||
(1.478) | (1.510) | (1.508) | |||
LEV | −0.254 *** | −0.146 * | 0.003 | 0.090 ** | −0.216 ** |
(0.097) | (0.086) | (0.004) | (0.040) | (0.085) | |
AGE | −0.007 | 0.003 | −0.001 | 0.005 | −0.000 |
(0.017) | (0.017) | (0.001) | (0.007) | (0.001) | |
AE | 0.029 | 0.077 | −0.004 | −0.002 | 0.014 ** |
(0.074) | (0.073) | (0.004) | (0.003) | (0.006) | |
AUDIT | 0.008 | −0.000 | 0.000 | 0.003 | |
(0.005) | (0.000) | (0.003) | (0.005) | ||
BIG4 | −0.024 * | ||||
(0.012) | |||||
Environment | −0.009 | ||||
(0.008) | |||||
HR | 0.003 | ||||
(0.007) | |||||
Community | 0.022 *** | ||||
(0.007) | |||||
Product | 0.017 ** | ||||
(0.008) | |||||
Year dummy | Yes | Yes | Yes | Yes | Yes |
Constant | 0.976 *** | 0.972 *** | 0.001 | −0.106 ** | 1.014 *** |
(0.138) | (0.096) | (0.004) | (0.042) | (0.085) | |
N | 210 | 210 | 210 | 210 | 210 |
F | 1.631 | 1.794 | 5.034 | 22.048 | 2.048 |
r2 | 0.093 | 0.099 | 0.219 | 0.498 | 0.128 |
r2_a | 0.036 | 0.044 | 0.175 | 0.475 | 0.066 |
(GRI) | (Non-GRI) | (Political) | (Non-Political) | (Islamic) | (Conventional) | |
---|---|---|---|---|---|---|
TFP | TFP | TFP | TFP | TFP | TFP | |
CSRDI | 0.010 ** | 0.005 | 0.006 | 0.007 * | 0.004 | 0.009 ** |
(0.005) | (0.003) | (0.004) | (0.004) | (0.006) | (0.003) | |
ROA | −0.211 | 0.816 | 3.032 | −2.314 | −4.708 | 1.020 |
(2.507) | (1.936) | (2.429) | (1.847) | (4.102) | (1.669) | |
LEV | −0.266 * | −0.177 | −0.150 | −0.202 * | 0.030 | −0.208 * |
(0.152) | (0.110) | (0.162) | (0.115) | (0.204) | (0.105) | |
AGE | −0.001 | −0.000 | −0.000 | −0.001 | 0.001 | −0.001 |
(0.002) | (0.001) | (0.001) | (0.001) | (0.003) | (0.001) | |
AE | 0.019 ** | 0.004 | 0.010 | 0.014 | −0.017 | 0.015 ** |
(0.009) | (0.008) | (0.009) | (0.009) | (0.020) | (0.006) | |
AUDIT | 0.004 | 0.005 | 0.015 * | −0.001 | 0.008 | 0.006 |
(0.009) | (0.007) | (0.009) | (0.007) | (0.015) | (0.006) | |
Year dummy | Yes | Yes | Yes | Yes | Yes | Yes |
Constant | 1.046 *** | 1.010 *** | 0.921 *** | 1.091 *** | 0.900 *** | 0.984 *** |
(0.171) | (0.098) | (0.177) | (0.098) | (0.161) | (0.116) | |
N | 84 | 126 | 98 | 112 | 49 | 161 |
F | 1.307 | 0.972 | 1.827 | 1.014 | 0.384 | 2.310 |
r2 | 0.166 | 0.086 | 0.189 | 0.100 | 0.103 | 0.146 |
r2_a | 0.039 | −0.003 | 0.086 | 0.001 | −0.164 | 0.083 |
1 | 2 | 3 | 4 |
---|---|---|---|
(First stage) | (Second stage) | (GMM) | |
TFP | TFP | TFP | |
CSRD (fitted value) | 0.018 *** | 0.008 *** | |
(0.006) | (0.003) | ||
0.008 *** | |||
(0.003) | |||
L.TFP | 0.208 ** | ||
(0.093) | |||
ROA | 0.187 | −1.393 | 1.143 |
(1.519) | (1.792) | (1.067) | |
LEV | −0.195 ** | −0.281 *** | −0.161 *** |
(0.088) | (0.102) | (0.050) | |
AGE | −0.011 | −0.001 | 0.004 |
(0.016) | (0.017) | (0.010) | |
AUDIT | 0.005 | 0.009 | 0.008 *** |
(0.006) | (0.006) | (0.002) | |
AE | 0.009 | 0.011 * | 0.001 |
(0.006) | (0.006) | (0.003) | |
Year dummy | Yes | Yes | Yes |
Constant | 1.042 *** | 0.889 *** | 0.742 *** |
(0.099) | (0.121) | (0.144) | |
N | 180 | 180 | 180 |
F | 82.654 | ||
r2 | 0.109 | 0.047 | |
r2_a | 0.051 | −0.016 | |
AR (1) (p value) | −4.73 (0.000) | ||
AR (2) (p value) | −0.06 (0.949) | ||
Sargan test (p value) | 62.45 (0.028) | ||
Hansen test (p value) | 21.29 (0.998) |
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Zheng, Y.; Rashid, M.H.U.; Siddik, A.B.; Wei, W.; Hossain, S.Z. Corporate Social Responsibility Disclosure and Firm’s Productivity: Evidence from the Banking Industry in Bangladesh. Sustainability 2022, 14, 6237. https://doi.org/10.3390/su14106237
Zheng Y, Rashid MHU, Siddik AB, Wei W, Hossain SZ. Corporate Social Responsibility Disclosure and Firm’s Productivity: Evidence from the Banking Industry in Bangladesh. Sustainability. 2022; 14(10):6237. https://doi.org/10.3390/su14106237
Chicago/Turabian StyleZheng, Yubin, Md. Harun Ur Rashid, Abu Bakkar Siddik, Wei Wei, and Syed Zabid Hossain. 2022. "Corporate Social Responsibility Disclosure and Firm’s Productivity: Evidence from the Banking Industry in Bangladesh" Sustainability 14, no. 10: 6237. https://doi.org/10.3390/su14106237