Relationship between Corporate Social Responsibility and Financial Performance in Islamic Banking

Abstract

The aim of this study is to evaluate the level of Corporate Social Responsibility Disclosure in Islamic banks and to analyze the relationship between performance indices Return On Average Assets (ROA) and Return On Equity (ROE) with the corporate social responsibility disclosure. An empirical analysis is conducted, based on the annual reports of 8 Islamic banks for years 2009 and 2010.  A Corporate Social Responsibility Disclosure Index (CRSDI) is constructed. To verify the link between ROA, ROE and CSRDI, regression models are run. The results indicate a lack in disclosing Corporate Social Responsibility, and the regression models show that there is no relation statistically significant between performance indices (ROA, ROE) and CSRD index.

Keywords: Islamic bank, ROA, ROE, Corporate Social Responsibility Disclosure, Regression, Content Analysis