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Corporate Social Performance And Financial Stability: Evidence From Islamic, Social And Conventional Banking Models

Author

Listed:
  • Syed Alwi Bin Mohamed Sultan

    (Universiti Malaya, Malaysia)

  • Wan Marhaini Binti Wan Ahmad

    (Universiti Malaya, Malaysia)

  • Obiyathulla Ismath Bacha

    (INCEIF University, Malaysia)

  • Roslily Ramlee

    (International Islamic University Malaysia, Malaysia)

Abstract

This paper addresses two key issues in Corporate Social Performance (CSP) research. First, it investigates the impact of CSP on Financial Stability (FS), and second, it examines the influence of different banking models on the relationship between CSP and FS. Using a cross-country sample of 117 financial institutions from 36 countries over an 8-year period (2013-2020) and the System Generalized Method of Moments (GMM) estimation method, it finds that banking models significantly affect the CSP-FS relationship. This is attributed to diminishing marginal benefits of economic growth beyond a certain level of financial intermediation, which increases financial risk. The results give new insights into the synergies and divergences between different banking models and the overarching goals of social performance and financial stability. This research contributes novel insights that can inform policymakers, regulators, and industry stakeholders in their quest for a more resilient and sustainable banking sector.

Suggested Citation

  • Syed Alwi Bin Mohamed Sultan & Wan Marhaini Binti Wan Ahmad & Obiyathulla Ismath Bacha & Roslily Ramlee, 2024. "Corporate Social Performance And Financial Stability: Evidence From Islamic, Social And Conventional Banking Models," Journal of Islamic Monetary Economics and Finance, Bank Indonesia, vol. 10(4), pages 811-840, November.
    • Handle: RePEc:idn:jimfjn:v:10:y:2024:i:4g:p:811-840
    DOI: https://doi.org/10.21098/jimf.v10i4.2273
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    More about this item

    Keywords

    Corporate social performance; CSP index; Financial stability; Islamic banking; Social banking; Values-based banking;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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