Corporate social responsibility and bank liquidity creation
Journal of Financial Research
School of Business and Law
Accounting and Finance Association of Australia and New Zealand (AFAANZ), Grant Number: AFAANZ Research Grant 2019
Under the stakeholder theory hypothesis, reputable corporate social responsibility (CSR) banks are expected to attract more loans and deposits, which in turn strengthens their ability to create liquidity. Our findings support this view. Further analyses reveal that the positive effect of CSR on liquidity creation differs depending on bank size, bank capital, and type of financial crisis. In addition, deposit growth, loan growth, lending rate, and funding rate are potential channels through which CSR influences bank liquidity creation. The findings are not driven by an endogeneity issue.