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The Influence of Corporate Social Responsibility and Corporate Governance on Banking Financial Performance

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  • Maryam Mangantar

Abstract

Purpose: This study aims to analyze the influence of corporate governance, corporate social responsibility on the financial performance of the banking sector as it is listed in the Indonesian Stock Exchange. Design/Methodology/Approach: This explanatory research uses secondary data in the form of Annual Corporate Financial Reports. Sample was selected by census techniques with a length of observation of 5 years from 2012 to 2016. The data analysis technique uses multiple regression models. Findings: The results of the study show that corporate social responsibility does not have any significant effect on financial performance as measured by the Return on Assets (ROA). Corporate governance does not have any significant effect on financial performance. Another finding is that social responsibility and governance have a positive direction with financial performance. Practical Implications: The good corporate governance and social responsibility will improve the banking's financial performance. The success of the company in improving its financial performance is inseparable from the application of good corporate governance. Originality/Value: The study implies a recommendation for the banking sector in Indonesia which is needed to improve the corporate governance and then the financial performance. Banking sector companies must pay attention and increase social responsibility because it can improve the company's financial performance.

Suggested Citation

  • Maryam Mangantar, 2019. "The Influence of Corporate Social Responsibility and Corporate Governance on Banking Financial Performance," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 95-105.
    • Handle: RePEc:ers:journl:v:xxii:y:2019:i:3:p:95-105
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    References listed on IDEAS

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    1. V.M. Morais Pereira & J.A. Candeias Bonito Filipe, 2018. "Quality of Board Members’ Training and Bank Financial Performance: Evidence from Portugal," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(3), pages 47-79.
    2. Seungwoo Oh & Ahreum Hong & Junseok Hwang, 2017. "An Analysis of CSR on Firm Financial Performance in Stakeholder Perspectives," Sustainability, MDPI, vol. 9(6), pages 1-12, June.
    3. Xiping Pan & Jinghua Sha & Hongliang Zhang & Wenlan Ke, 2014. "Relationship between Corporate Social Responsibility and Financial Performance in the Mineral Industry: Evidence from Chinese Mineral Firms," Sustainability, MDPI, vol. 6(7), pages 1-25, June.
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    6. R. Bratamanggala, 2018. "Factors Affecting Earning Per Share: The Case of Indonesia," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(2), pages 92-100.
    7. Indra Siswanti & Ubud Salim & Eko Ganis Sukoharsono & Siti Aisjah, 2017. "The Impact of Islamic Corporate Governance, Islamic Intellectual Capital and Islamic Financial Performance on Sustainable Business Islamic Banks," International Journal of Economics and Financial Issues, Econjournals, vol. 7(4), pages 316-323.
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    More about this item

    Keywords

    Corporate social responsibility; good corporate governance; company financial performance; banking sector.;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G3 - Financial Economics - - Corporate Finance and Governance

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