Relationship among CSR Initiatives and Financial and Non-Financial Corporate Performance in the Ecuadorian Banking Environment

Abstract

This study explores the relationship between corporate performance and corporate social responsibility (CSR) initiatives in the Ecuadorian banking environment. The first model employs both return on assets and return on equity as proxy for the financial performance while the second model includes the non-financial corporate performance constructs collected by a self-designed online questionnaire. We found a statistically positive relationship among CSR initiates and the financial and non-financial indicators in corporate performance. Our findings revealed that economic, legal, ethical, and philanthropic responsibility initiatives positively affect the non-financial corporate performance of the Ecuadorian banking environment. Similarly, the non-financial corporate performance is significantly positively influenced by the customer's brand trust, customer's brand loyalty, customer's perception of quality, and customer satisfaction. Study results are mostly consistent with the banking environment of other countries, especially in Bangladesh, Pakistan, and Lebanon. Customers of the Ecuadorian banking environment perceived banks as socially responsible entities and Ecuadorian banks invest resources in CSR activities as a corporate governance policy to increase their financial and non-financial performance. Future research should include a corporate governance index with a CSR component as an independent variable to increase statistical models' power.