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Corporate social responsibility, financial globalization and bank soundness in Europe – Novel evidence from a GMM panel VAR approach

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  • Gaies, Brahim
  • Jahmane, Abderrahmane

Abstract

Based on macro and micro perspectives, this paper is a pioneering effort to study the causal relationship between corporate social responsibility (CSR), bank soundness (profitability, stability) and financial globalization in the European banking sector. The results show that CSR performance enhances bank stability, while the financial costs of CSR can reduce bank profitability. We also reveal a virtuous circle between financial globalization and bank soundness, as well as a positive effect of financial globalization on CSR. However, the divergence between local and foreign CSR practices in the banking sector can hinder the financial integration process.

Suggested Citation

  • Gaies, Brahim & Jahmane, Abderrahmane, 2022. "Corporate social responsibility, financial globalization and bank soundness in Europe – Novel evidence from a GMM panel VAR approach," Finance Research Letters, Elsevier, vol. 47(PB).
    • Handle: RePEc:eee:finlet:v:47:y:2022:i:pb:s154461232200085x
    DOI: 10.1016/j.frl.2022.102772
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    References listed on IDEAS

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    Cited by:

    1. Gaies, Brahim & Nakhli, Mohamed Sahbi & Sahut, Jean-Michel, 2022. "What are the effects of economic globalization on CO2 emissions in MENA countries?," Economic Modelling, Elsevier, vol. 116(C).
    2. Anwer, Zaheer & Goodell, John W. & Migliavacca, Milena & Paltrinieri, Andrea, 2023. "Does ESG impact systemic risk? Evidencing an inverted U-shape relationship for major energy firms," Journal of Economic Behavior & Organization, Elsevier, vol. 216(C), pages 10-25.
    3. Gupta, Ranjan Das & Deb, Soumya G., 2023. "Interlinkage between corporate social, environmental performance and financial performance: Firm-mediators in a multi-country context," Finance Research Letters, Elsevier, vol. 52(C).

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    More about this item

    Keywords

    Financial globalization; Financial instability; Endogeneity; Slack resources theory; Good management theory;
    All these keywords.

    JEL classification:

    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • F64 - International Economics - - Economic Impacts of Globalization - - - Environment
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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