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Corporate Social Responsibility of Banking Firms of Bangladesh

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Corporate social responsibility is getting more powerful having crucial impact on the decision making of external shareholders about a firm. Investors are now more concerned about firm’s social behavior through corporate social reporting while making their investment decision (Aguilera et al. 2006). Though a substantial number of firms are found to provide disclosures about their corporate social performances, there is variation in terms of quality (Habek and Wolniak, 2015).

Different pressure groups are emerging who demand that firms will be responsible for the contacts they have on social, political and ecological environments (Azim et al. 2011). The level of Corporate Social Responsibility (CSR) expenditure and performance varies firm to firm. In a developing country like Bangladesh substantial variation of CSR performance and disclosure is noticeable among firms and it creates a question that which factors are responsible for such variation? In 2011, a notable attempt was the issuance of a Statutory Regulation Order (SRO) from National Board of Revenue (NBR), Bangladesh where a tax exemption was provided on the corporate social responsibility expenditure made by the banking firms.

No previous research has identified such exploration of regulatory impact on the CSR practices of banking industries in Bangladesh. This has been crucial to investigate because the acceptance and implementation of laws and regulations by firms is key rather just passing out. Khan et al. (2012) mentions that there was a Statutory Regulatory Order (SRO) issued by the govt. regarding tax rebate on the actual amount spent on CSR activities by the firms in Bangladesh but did not examine the impact of such regulation on the degree of CSR expenditures and disclosures. This study has made an attempt to contribute through a striking investigation of regulatory impact on the CSR performance and disclosure level.

On the other hand, a number of internal factors related with the firm’s governance and structure are supposed to have driving impact on the extent and quality of corporate social responsibility performance and reporting disclosures. As corporate social responsibility is voluntary initiative in Bangladesh and as a matter of choice by boards, different internal dynamics of firms including corporate governance factors play a big part (Haniffa and Cooke, 2005).

The corporate governance codes and practices of Bangladesh has been a subject of wide discussion and criticism due to the existence of some thin-skinned issues like family dominance, concentrated ownership structure, less effective board composition etc. For an economically emerging country like Bangladesh, no prior study has yet been able to specify a particular corporate governance model (Machold and Vasudevan, 2004; Rwegasira, 2000). The concentration on specific firm internal and governance factors is a best way to study impact and formulate policy by the regulators. There has been noticed a long-lasting gap to examine empirically the impact two particular issues, firm network and board expertise, on the degree of CSR performance and disclosures.

The study selected listed banking firms of Bangladesh as the sample of the study because this sector is considered most successful sector in Bangladesh (Sarker, 2000) and most of the banks operating in Bangladesh are listed in the capital market (Das et al. 2015). This study is expected to explore internal dynamics of firms related with corporate governance that influence firm’s social reporting status and pass a signal to the relevant authoritative bodies about the urgency of rules and regulations to make firms more socially responsible.

Cite this paper

Corporate Social Responsibility of Banking Firms of Bangladesh. (2020, Dec 16). Retrieved from https://samploon.com/corporate-social-responsibility-of-banking-firms-of-bangladesh/

FAQ

FAQ

What are the 3 corporate social responsibility?
Corporate social responsibility refers to a business's commitment to operating in an ethical and sustainable manner, while also considering the impact of their actions on society and the environment. The three main aspects of corporate social responsibility include economic, social, and environmental responsibility.
What are the 4 corporate social responsibility?
The 4 corporate social responsibility are environment, economic, social, and governance.
What is corporate social responsibility in banking sector?
The banking sector has a responsibility to the public to ensure the safety and soundness of the banking system. The banking sector also has a responsibility to promote economic growth and development.
Why banks should do CSR?
There are many organization culture issues, but three common ones are communication, values, and goals.
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