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How does corporate social and environmental responsibility contribute to investment efficiency and performance? Evidence from the financial sector of China

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  • Adnan Safi
  • Yingying Chen
  • Abdul Qayyum
  • Salman Wahab
  • Maaz Amin

Abstract

Corporate social responsibility (CSR) and corporate environmental responsibility (CER) are important determinants of a firm’s investment efficiency and financial performance. However, there is scant literature using the financial sector, and studies have excluded the financial sector due to its different capital structure. Therefore, this study investigates the effect of corporate social and environmental responsibility on China’s financial institutions’ investment efficiency and financial performance from 2010 to 2019. The data analysis consists of multivariate Driscoll and Kraay regression analysis, while a two-stage least squares regression is also used for robustness purposes. The results show a significant positive relationship between corporate social responsibility, investment efficiency, and the performance of financial institutions. The results also show that environmentally responsible firms perform better in terms of investment efficiency and financial performance. Furthermore, for non-state-owned enterprises, this impact is higher as compared to state-owned enterprises. Therefore, managers should strategically consider corporate social and environmental responsibility to reduce agency problems and improve their investment efficiency and performance.

Suggested Citation

  • Adnan Safi & Yingying Chen & Abdul Qayyum & Salman Wahab & Maaz Amin, 2023. "How does corporate social and environmental responsibility contribute to investment efficiency and performance? Evidence from the financial sector of China," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 36(2), pages 2142816-214, July.
    • Handle: RePEc:taf:reroxx:v:36:y:2023:i:2:p:2142816
    DOI: 10.1080/1331677X.2022.2142816
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    Cited by:

    1. Pan, Changchun & Yu, Jingxia & Huang, Yuzhe & Altuntas, Sumeyya, 2023. "The dynamic relationship between resources, finances, and sustainable development: An in-depth analysis," Resources Policy, Elsevier, vol. 86(PB).
    2. Tan, Yali & Huang, Sen, 2023. "Sustainable development through digitalization: An exploration of natural resource extraction in China," Resources Policy, Elsevier, vol. 86(PA).
    3. Bagh, Tanveer & Zhou, Bingjun & Alawi, Suha Mahmoud & Azam, Rauf I, 2024. "ESG resilience: Exploring the non-linear effects of ESG performance on firms sustainable growth," Research in International Business and Finance, Elsevier, vol. 70(PA).
    4. Han, Zhihong & Gong, Lixin & Chen, Huiwen & Yüksel, Serhat, 2023. "The role of mineral and oil resources in achieving a clean environment in emerging economies: An asymmetric analysis," Resources Policy, Elsevier, vol. 86(PB).
    5. Han, Zhihong & Gong, Lixin & Long, Chi & Afzal, Anees, 2023. "Towards resourceful sustainability: Integrating minerals resources in achieving development goals," Resources Policy, Elsevier, vol. 87(PA).

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