We discuss the relationship between bank connections (BC) and corporate social responsibility (CSR). We find that the presence of BC is expected to increase the level of CSR by 0.4%. The results hold after a number of robustness tests. In addition, we also discuss the role of information asymmetry and financial constraints and find that BC can mitigate both information asymmetry and financial constraints faced by firms, thereby exerting a positive impact on CSR. Furthermore, we also find that a higher level of economic development can stimulate the fulfilment of CSR.

Keywords: Bank Connections, Corporate Social Responsibility, Targeted Poverty Alleviation

Download the full text PDF for viewing and using it according to the license of this paper.

Conflicts of Interest:

The authors declare that they have no conflicts of interest to report regarding the present study.

Funding

None.

References:

Kitzmueller, M., & Shimshack, J. (2012). Economic perspectives on corporate social responsibility. Journal of Economic Literature, 50(1), 51-84.
Ferrell, A., Liang, H., & Renneboog, L. (2016). Socially responsible firms. Journal of Financial Economics, 122(3), 585-606.
World Bank. (2020). The World Bank Annual Report 2020. Washington, DC: World Bank.
Jo, H., & Na, H. (2012). Does CSR reduce firm risk? Evidence from controversial industry sectors. Journal of Business Ethics, 110, 441-456.
Shen, C. H., Wu, M. W., Chen, T. H., & Fang, H. (2016). To engage or not to engage in corporate social responsibility: Empirical evidence from the global banking sector. Economic Modelling, 55, 207-225.
Pérez, A., & del Bosque, I. R. (2015). How customer support for corporate social responsibility influences the image of companies: Evidence from the banking industry. Corporate Social Responsibility and Environmental Management, 22(3), 155-168.
Santikian, L. (2014). The ties that bind: Bank relationships and small business lending. Journal of Financial Intermediation, 23(2), 177-213.
Chen, W. (2023). Bank connections, corporate social responsibility and low-carbon innovation. Energy Policy, 183, 113840.
Shleifer, A., & Vishny, R. W. (1997). A survey of corporate governance. Journal of Finance, 52(2), 737-783.
Bae, K. H., Kang, J. K., & Lim, C. W. (2002). The value of durable bank relationships: evidence from Korean banking shocks. Journal of Financial Economics, 64(2), 181-214.
Gambini, A., & Zazzaro, A. (2013). Long-lasting bank relationships and growth of firms. Small Business Economics, 40, 977-1007.
Du, Z., & Wang, Q. (2024). The power of financial support in accelerating digital transformation and corporate innovation in China: evidence from banking and capital markets. Financial Innovation, 10(1), 76.
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305-360.
Rajan, R. G., & Zingales, L. (1995). What do we know about capital structure? Some evidence from international data. Journal of Finance, 50(5), 1421-1460.
Beck, T., Demirgüç-Kunt, A., & Levine, R. (2020). Financial development and social outcomes: Evidence from the financial crisis. Journal of Financial Intermediation, 44, 1-33.
Yuan, T., Wu, J. G., Qin, N., & Xu, J. (2022). Being nice to stakeholders: The effect of economic policy uncertainty on corporate social responsibility. Economic Modelling, 108, 105737.
Amihud, Y., & Mendelson, H. (1986). Asset pricing and the bid-ask spread. Journal of Financial Economics, 17(2), 223-249.
Whited, T. M., & Wu, G. (2006). Financial constraints risk. The Review of Financial Studies, 19(2), 531-559.

This is an open access article under the CC BY-NC license.

Journal Menu

Journal Browser

Table of Contents

Bank Connections and Corporate Social Responsibility: Evidence from Chinese Targeted Poverty Alleviation