Corporate social responsibility and financial performance: An empirical study on Egyptian banks

Due to the significance of the banking sector in the stability and welfare of any economy; it is important to constantly monitor and evaluate its performance. Most banks have incorporated social practices in their business operations regardless of the managers’ real intentions of whether it is for the corporate image that might lead to better performance; or it is for the well being of the environment or society overall. Consequently, the purpose of this study is to check if the concept of the CSR is widely applied to local, international and Islamic banks operating in Egypt over the interim period from 2005 to 2013 and if there is a difference in the application. Moreover does CSR really matters and affect banks’ financial performance. Descriptive statistics will be used. The difference in performance will be tested for statistical significance using one way ANOVA tests. The statistical study conducted on 34 banks categorized under Local commercial, International and Islamic banks are operating in Egypt. The relationship is neutral when it is looked at from the ROA measure. The banks’ Corporate Social Responsibility did not have any impact on the financial performance of the banks. However, the relationship was positive when the financial performance perspective was looked from the estimated ROE and NIM; it implies that banks’ corporate social responsibility practices not act as costs to shareholders as they do not reduce the returns. Whether the relationship is positive or neutral, the coefficient for both models are rather small as well as the model that resulted in Neutral relationship had lower standard of error which indicates that it is a better model compared to the model using ROE and NIM as the dependent variable. Therefore relationship is Neutral