Effect of Corporate Social Responsibility on Profitability of Banking Sector: A Case Study of Pakistan.

Abstract

The expenditures of a corporation to promote the welfare activities in the society are not the responsibility of any company according to law. To promote the social welfare in the society is not the legal requirement for a company neither corporation is legally bound by any regulation or Govt. So, that is why this study investigates the impact of corporate social responsibility on the profitability of banking sector of Pakistan. Current Study collects the data of 10 banks listed in stock exchange (i.e., national and multinational banks). The current study's independent variable is corporate social responsibility, and we take ROA, and ROE as dependent variables and Debt ratio, growth and age of the bank as control variables to measure the profitability of banks. Regression and Correlation techniques are used to check the relationship and effect of CSR on monetary benefits of banking industry in Pakistan. There is no effect of CSR on ROE and ROA in an uncontrolled environment but there is positive and significant impact on ROA controlling for debt ratio.