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Does Corporate Social Responsibility Affect the Cost of Bank Loans? Evidence from China

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  • Jun Huang
  • Zhixin Duan
  • Guowei Zhu

Abstract

This article examines the link between corporate social responsibility (CSR) and cost of bank loans (CBL) in China. We find that there exists an inverse U-shape relationship between CSR and CBL. In addition, CSR threshold for state-owned enterprises (SOEs) is higher than for non-SOEs. In particular, CSR threshold for SOEs is lower in regions with high degree of marketization than in regions with low degree of marketization. The findings indicate that value-destroying effect occurs during CSR underinvestment phase, which is different from the overinvestment view. Moreover, the effect of CSR on CBL also depends on contextual factors such as firm ownership and marketization level.

Suggested Citation

  • Jun Huang & Zhixin Duan & Guowei Zhu, 2017. "Does Corporate Social Responsibility Affect the Cost of Bank Loans? Evidence from China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 53(7), pages 1589-1602, July.
    • Handle: RePEc:mes:emfitr:v:53:y:2017:i:7:p:1589-1602
    DOI: 10.1080/1540496X.2016.1179184
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    Cited by:

    1. Ling Huang & Haiyue Liu & Jack Hou & Fulong Xiao, 2022. "Long‐term financing effects of Chinese non‐SOEs Belt and Road OFDI," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(S1), pages 1819-1850, April.
    2. Silvia Bressan, 2024. "Environmental, Social, and Governance Scores and Loan Composition Inside United States Banks," Sustainability, MDPI, vol. 16(18), pages 1-11, September.
    3. Yongfeng Zhang & Peng Wang & Jongwook Kwon, 2021. "CSR in China: Does Being Close to the Central or Local Government Matter?," Sustainability, MDPI, vol. 13(16), pages 1-12, August.
    4. Justyna Zabawa & Cyprian Kozyra, 2020. "Eco-Banking in Relation to Financial Performance of the Sector—The Evidence from Poland," Sustainability, MDPI, vol. 12(6), pages 1-23, March.
    5. Cao, Qiang & Zhu, Tingting & Yu, Wenmei, 2024. "ESG investment and bank efficiency: Evidence from China," Energy Economics, Elsevier, vol. 133(C).
    6. Zhifang Zhou & Tao Zhang & Kang Wen & Huixiang Zeng & Xiaohong Chen, 2018. "Carbon risk, cost of debt financing and the moderation effect of media attention: Evidence from Chinese companies operating in high‐carbon industries," Business Strategy and the Environment, Wiley Blackwell, vol. 27(8), pages 1131-1144, December.
    7. Ma Zhong & Rong Xu & Xinyi Liao & Shuangli Zhang, 2019. "Do CSR Ratings Converge in China? A Comparison Between RKS and Hexun Scores," Sustainability, MDPI, vol. 11(14), pages 1-20, July.
    8. Lingfu Kong & Minhas Akbar & Petra Poulova, 2023. "The Role of Environment, Social, and Governance Performance in Shaping Corporate Current and Future Value: The Case of Global Tech Leaders," Sustainability, MDPI, vol. 15(17), pages 1-14, August.

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