Title: The effect of corporate social responsibility on European bank credit ratings

Authors: Islem Arous; Nidhaleddine Ben Cheikh; Salah Ben Hamed

Addresses: University of Sfax, Route de l'Aéroport Km 0.5 BP 1169. 3029, Sfax, Tunisia ' ESSCA School of Management, 1 Rue Joseph Lakanal, 49000 Angers, France ' Fseg Tunis, Campus Universitaire Farhat Hached, B.P. 248 – El Manar II – 2092, Tunis, Tunisia

Abstract: The possible influences of corporate social responsibility (CSR) on corporate credit ratings have been the subject of several studies in recent years, but no work has yet analysed this relationship among banks. As a result, this research aims to identify the effect of CSR on bank credit ratings in a sample of 27 European banks over the annual period 2007-2016. We suggest implementing a panel quantile regression analysis, where the impact of CSR is provided for low, medium, and high credit ratings, respectively. The empirical results show that the importance of CSR differs according to the credit rating level of each bank. Our findings point out that poorly rated banks need to develop and improve their environmental, social, and governance performance. In addition, we highlight that the environmental score has the strongest effect on European banks' credit ratings in comparison to the social and governance scores.

Keywords: corporate social responsibility; CSR; credit ratings; quantile regression; European banks.

DOI: 10.1504/IJBGE.2024.139636

International Journal of Business Governance and Ethics, 2024 Vol.18 No.4/5, pp.472 - 491

Received: 24 Aug 2022
Accepted: 12 Jan 2023
Published online: 05 Jul 2024 *

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