Social Banking with CSP and CFP Relation in India: An Empirical Analysis

Abstract

Social banking considers well-being of the society through the positive relationship between Corporate Social Performance (CSP) and Corporate Financial Performance (CFP) of economic units. This paper seeks to understand the relationship between CSP and CFP in Indian banking industry. The study is carried out employing methodologies like Dickey-Fuller/Augmented Dickey-Fuller stationary test, Cointegration, Granger causality, Fixed and Random effects models. Results indicate that there is a positive relationship between CSP and CFP but with almost zero estimated coefficient value. In this case, the CSP proxies like deposit with demat account and research & development Granger cause the CFP proxy of excess return. Therefore, Indian banking industry should have more concern about the above proxies for effective social banking.