Title: Banking efficiency analysis under corporate social responsibilities

Authors: Kwaku Ohene-Asare; Mette Asmild

Addresses: Economics Department, The University of Warwick, CV4 7AL, Coventry, UK. ' Institute of Food and Resource Economics, University of Copenhagen, Rolighedsvej 25, 1958 Frederiksberg C, Denmark

Abstract: This paper expands the banking efficiency literature by developing a banking intermediation model that captures both profit-maximising and corporate social responsibilities (CSRs) of banks. Using a dataset of 21 banks for each year 2006 to 2008, we evaluate the relative efficiency of Ghanaian banks using data envelopment analysis (DEA) thus contributing to the scanty research on African banks. We observe a significant difference between the DEA model that includes CSR and the other without CSR, an indication that the inclusion of CSR may be important for bank efficiency assessment. As a further analysis, we use a second stage OLS regression which confirms a positive relationship between CSR and profitability and efficiency indicators. The findings suggest that considering CSR in efficiency assessment of banks is not only important on conceptual grounds, but also indicates that banks that are socially responsible may have economic advantages.

Keywords: banking efficiency; corporate social responsibility; bank CSR; Ghana; data envelopment analysis; DEA; second-stage regression; African banks; profitability.

DOI: 10.1504/IJBAAF.2012.048331

International Journal of Banking, Accounting and Finance, 2012 Vol.4 No.2, pp.146 - 171

Accepted: 27 Mar 2012
Published online: 23 Aug 2014 *

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