The Influence of CSR on Financial Performance: Cypriot Banks

This report analyzes the impact of Corporate Social Responsibility (CSR) on the financial performance of the Cypriot banking sector, focusing on five key banking groups: Hellenic Bank, Ancoria Bank, RCB Bank, Cyprus Bank, and Cyprus Cooperative Bank. The analysis examines how CSR activities, such as environmental initiatives, community support, and ethical business practices, correlate with financial metrics like Return on Equity (ROE) and Return on Assets (ROA). The study uses data from annual reports and statistical analysis (SPSS) to assess the CSR activities of each bank and their effect on financial health. The findings suggest that banks actively promoting CSR, like Hellenic and Ancoria, tend to have a positive financial status, although specific spending on CSR is not disclosed. The report highlights the correlation between CSR engagement and shareholder/investor trust, emphasizing the role of CSR in building a positive corporate image and attracting customers. The report also provides statistical data, including ANOVA and correlation tables, to support the analysis. The study concludes that CSR initiatives can significantly influence the financial performance of Cypriot banks, particularly in terms of building a strong reputation and fostering stakeholder relationships.

TOPIC - THE IMPACT OF CSR ON THE FINANCIAL
PERFORMANCE OF CYPRIOT BANKING SECTOR
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Table of Contents
Analysis:..........................................................................................................................................3
Performance of undertaken banks:..................................................................................................3
Financial position of banks:.............................................................................................................8
Reference List................................................................................................................................10
Appendices....................................................................................................................................11
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Analysis:
Performance of undertaken banks:
The prescribed five banking groups have focused on “corporate social responsibility.” Hellenic
bank is performing its CSR related activities depending on it’s terminates of education, society,
research and health (Maon et al. 2017). They also show their concern on the society’s culture,
environment and art. In 2016, this bank has taken participation in a program, where they support
families to solve their problems and meet needs. Hellenic bank has set some milestones for
building a good framework of CSR. This banking group has decided to take instant action based
on the planted environmental policy. They have arranged many voluntary and environmental
actions like tree planting and arranging many programs with ecological educational institutes, so
that they can increase the consciousness regarding environment amongst students. The
management always tries to monitor the social and environmental risks connected with the
funding of client activities. The evaluations of social and environmental risks are considered as a
portion of “decision making.”
ANOVA
Sum of
Squares
df Mean
Square
F Sig.
ROE17
Between
Groups 5989.176 4 1497.294 . .
Within Groups .000 0 .
Total 5989.176 4
ROE15
Between
Groups 1083.059 4 270.765 . .
Within Groups .000 0 .
Total 1083.059 4
(Source: Created by SPSS)
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According to belief of “Cypriot Banking industry” CSR activities help to build a connection and
trustworthiness among shareholders, users and the respective company itself. The management
of “Cypriot group” has attached them while giving the superb quality of CSR performance.
These banking groups are presenting CSR activities in a modern, transparent, competitive and
sustainable way (hellenicbank.com, 2019).
(Source: Created by SPSS)
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In 2015, the “Ancoria bank” has showed its CSR report for the 1st time. It had decided to choose
a new field for its CSR activity, which had a great impact on social and environmental aspects
(Igbudu et al. 2018). The intention of Ancoria bank is to manage its annual activities and group’s
strategy in the basis of CSR and to attract shareholders. On the other hand, RCB bank is not
disclosing its CSR related activities or anything else in its annual report. The same thing can be
said for Cyprus bank, although it has strong financial basis with healthy corporate governance
structure (Igbudu et al. 2018). [Referred to Appendix 1]
Statistics
ROA17
N Valid 5
Missing 0
Mean 2.382000
Std. Error of
Mean .5326669
Median 2.390000
Mode .8300a
Std. Deviation 1.1910793
Variance 1.419
a. Multiple modes exist. The
smallest value is shown
(Source: Created by SPSS)
However, RCB bank has given some short details regarding its CSR performance in its official
website. The charity and sponsorship initiatives revolve the commitment of RCB bank for
developing a sustainable society. The reinforce of culture, charity organizations, arts, sports,
public assistance, environmental protection and health services is considered as the spine of the
concerned bank’s CSR activity. This bank splits a simple vision which promises to make a
comparatively better local section for further. The bank has taken part in each single initiative
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with the common view of making the community better. RCB bank has also encouraged the
“cross-cultural ties” and supports the events which help to bring the relations closer among
different nations. The strategic location of RCB bank is situated at the crossroads of Africa,
Europe and Asia, which assists the concerned institution to make some cultural exchange and
build good cooperation level among the decision makers, business leaders and regional
governments. CSR initiatives taken by RCB bank also involve an agenda regarding its staffs
which inspires serving and volunteering the main goal of RCB bank for presenting a socially
reliable business. Thus CSR activities can be utilized in the daily operations of banks.
(Source: Created by SPSS)
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Cyprus cooperative bank do their business in the ethical manner. They look after all the aspects
of the social, economic and environmental impact. The bank looks after all the human rights and
helps people against their rights. This kind of behavior by the bank impacts the society in the
positive manner. The bank is a kind of business whose main aim to earn profit. But this bank
does their business ethically. This means that the social responsibility is combined with the
business programs. This help the people to understand the business m9ore easily and they get
attract towards it. These kinds of banks will attract more customers as they perform socially.
The social benefit helps them to increase their customers. This relationship of social workings
and business is tremendous. This kind of banks just does not want to increase their profits but
also wants to engage in social activities. They create a different reputation for their bank among
the customers.
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(Source: Created by SPSS)
Financial position of banks:
Based on the given data of annual reports of these five banking groups it has found that no
company is disclosing the amount they have spent for their CSR activities. However, it is clear
that all corporate groups are agreed to perform CSR activities well to build a strong connection
with its investors or shareholders (Ferraris et al. 2016). Therefore it can be stated that Ancoria
bank, Cypriot bank and Hellenic bank is going through a healthy financial status as they are
highlighting their CSR activities and shows more interest on that area. On another side, the
“RCB bank” has no financial record of any kind loss from its business or investments, although
it has not disclosed its CSR performances (Leonidou et al. 2016). The financial analysis shows a
fluctuating graph of the ROA or ROE value of these five banks. In the “fiscal year” 2018-2019,
Cyprus bank only generates a negative return from its assets and equity. In the fiscal year this
bank also generates a negative ROE, whereas it becomes able to get a positive ROA. Here, the
RCB bank only becomes able to generate positive return from its invested assets and equity since
2013 to 2019.
Correlations
ROE17 ROE16 ROE15
Pearson
Correlation
ROE17 1.000 .644 -.266
ROE16 .644 1.000 .134
ROE15 -.266 .134 1.000
Sig. (1-tailed)
ROE17 . .120 .333
ROE16 .120 . .415
ROE15 .333 .415 .
N ROE17 5 5 5
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ROE16 5 5 5
ROE15 5 5 5
(Source: Created by SPSS)
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Reference List
Journals
Igbudu, N., Garanti, Z. and Popoola, T., 2018. Enhancing Bank Loyalty through Sustainable
Banking Practices: The Mediating Effect of Corporate Image. Sustainability, 10(11), p.4050.
Maon, F., Swaen, V. and Lindgreen, A., 2017. One vision, different paths: An investigation of
corporate social responsibility initiatives in Europe. Journal of Business Ethics, 143(2), pp.405-
422.
Ferraris, A., Giacosa, E., Halili, E. and Mazzoleni, A., 2016. A MODEL FOR VERIFYING THE
CORRELATION BETWEEN THE COMPANY’S SIZE AND ITS PERFORMANCE.
In Innovation, Entrepreneurship and Digital Ecosystems (Vol. 1, pp. 692-706). EuroMed Press.
Leonidou, L.C., Christodoulides, P., Kyrgidou, L.P. and Palihawadana, D., 2017. Internal drivers
and performance consequences of small firm green business strategy: The moderating role of
external forces. Journal of Business Ethics, 140(3), pp.585-606.
Websites
bankofcyprus.com, (2019), Bank of Cyprus, Available at:
https://www.bankofcyprus.com/ banking [Accessed on: 15.07.2019]
hellenicbank.com , (2019), hellenic bank, Available at:
https://www.hellenicbank.com/portalserver/hb-en-portal/en/personal-banking [Accessed on:
15.07.2019]
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Appendices
Appendix 1: Estimation
(Source: Created by SPSS)
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