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Does corporate social responsibility pay? Evidence from social ratings in microfinance institutions

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  • Simo, Christelle
  • Tchakoute Tchuigoua, Hubert
  • Nzongang, Joseph

Abstract

Does it pay for microfinance institutions (MFIs) to be socially responsible? Drawing on the information asymmetry framework and using an aggregate measure of social performance (social ratings), we investigate the association between MFI corporate social performance (CSP) and capital structure. Our findings suggest that among investors, a relationship between social performance and capital structure only emerges when considering subsidies. We also investigate the effects of profit orientation by analyzing whether the financial structure of for-profit (vs nonprofit) MFIs is sensitive to social ratings. Our findings highlight the importance of social performance as a major determinant of MFI capital structure.

Suggested Citation

  • Simo, Christelle & Tchakoute Tchuigoua, Hubert & Nzongang, Joseph, 2023. "Does corporate social responsibility pay? Evidence from social ratings in microfinance institutions," Technological Forecasting and Social Change, Elsevier, vol. 187(C).
    • Handle: RePEc:eee:tefoso:v:187:y:2023:i:c:s0040162522007016
    DOI: 10.1016/j.techfore.2022.122180
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