An Empirical Study on the Impact of

Corporate Social Responsibility

Disclosure on Financial Performance of
Universal Banks in the Philippines
(2009-2018)

Presented by:
 Regine Marie L. Talucod
 Introduction
Statement of the Problem

 Do corporate social responsibility disclosure has an impact on profitability of

universal banks in the Philippines?

 Do corporate social responsibility disclosure has an impact on operating

efficiency of universal banks in the Philippines?

 Do corporate social responsibility disclosure has an impact on financial

leverage of universal banks in the Philippines?

Theoretical Framework

Legitimacy Theory

Stakeholder Theory
 Conceptual Framework
Financial Performace

Profitability

Corporate Social
Operating Efficiency C
Responsibility DisclosureC

Financial
Leverage C
 Hypothesis

Ho1: Corporate Social Responsibility do not have a significant impact on

profitability of universal banks in the Philippines

Ho2: Corporate Social Responsibility do not have a significant impact

on Operating Efficiency of universal banks in the Philippines.

Ho3: Corporate Social Responsibility do not have a significant impact

on Financial Leverage of universal banks in the Philippines.
 Methodology
Population Total: 21

Sampled Banks:
• BDO Unibank, Inc.
• Land Bank of the Philippines
• Rizal Commercial Banking Corporation
• Security Bank, Union Bank of the Philippines
• United Coconut Planters Bank
• China Banking Corporation
• Metropolitan Bank and Trust Company
• Philippine National Bank
• East West Banking Corporation.
 Methodology
Model Specification

Model 1 : Profitability

NPM= β0 + β1CSRD + β2Bsize + β3CR + β4LR + β5OHE + ε

Model 2 : Operating Efficiency

ATO= β0 + β1CSRD + β2Bsize + β3CR + β4LR + β5OHE + ε

Model 3 : Financial Leverage

AER= β0 + β1CSRD + β2Bsize + β3CR + β4LR + β5OHE + ε
 Methodology
Model Specification

NPM- Net Profit Margin

(Profitability
Bsize- log of total assets
ATO- Asset Turnover
(Operating Efficiency) CR- Capital Ratio

AER- Asset to Equity Ratio LR- Loan ratio

(Financial Leverage)
OHE- Overhead Expenses
CSRD- Corporate Social
Responsibility Disclosure
 Methodology
Variables Description Measurement
Independent Variable
Four Different
Categories of CSR is
used to create a
composite index for
CSR disclosure each
item under the four
categories is given a
score of 1 if it is
Corporate Social disclosed in the annual
CSRD Responsibility report otherwise 0.
Dependent Variables
Net income divided by
NPM Net Profit Margin Sales
ATO Asset Turnover Sales divided Assets
Assets divided by
AER Assets to Equity Ratio Average Equity
Control Variables
Natural logarithm of
Bsize Bank Size total assets
Total Assets divided by
CR Capital Ratio Total Equity
Total Loans divided by
LR Loan Ratio Total Assets
Non-Interest Expense
OHE Overhead Expenses divided Total Assets
 Methodology
Descriptive Statistics
Standard
Variables N Minimun Maximum Mean
Deviation
Independent and Dependent Variables
CSR Disclosure
Index 95 0.181818 0.775974 0.584814 0.119469
Profitabiltiy 95 0.042397 248.7534 2.971595 25.48769
Operating
Efficiency 95 0.019738 0.327447 0.053066 0.043947
Financial
Leverage 95 0.389857 17.52096 9.100883 2.515892
Control Variables
Bank Size 95 4.875075 6.48033 5.699301 0.361661
Capital Ratio 95 0.057075 0.719499 0.121797 0.067722
Loan Ratio 95 0.003406 1.383735 0.474943 0.156574
Overhead
Expense 95 0.015046 0.224281 0.035377 0.028473
 Empirical Results and Interpretation
Multiple Regression Analysis
Dep. Variables: Financial Perforamance
Variables Model 1 Model 2 Model 3
Corporate Social Disclosure 39.11313* 0.0478724 1.01683
(23.03108) (.0365273) (1.736571)
Bank Size -2.643951 0.0042831 0.7711412
(7.658292) (.012146) (.5774443)
Capital Ratio -8.541231 0.1335137** -22.08949***
(39.87973) (.0632492) (3.006979
Loan Ratio -10.27615 -0.0028081 -2.736652**
(17.54805 (.0278312) (1.323144)
Overhead Expense -17.48648 0.5582191*** 4.128276
(95.40131 (.1513063) (7.193372)
Constant 1.705838 -0.034017 7.955396
(44.38312) (.07073916) (3.34654)

N 95 95 95
Adjusted R squared 0.034 0.1827 0.4364
Standard errors in parentheses. ***-significant at 1%
**-significant at 5% *- significant at 10%
 Conclusion and Recommendation
Conclusion

• Based on the results the researcher comes up with a

conclusion that Corporate Social Responsibility has a
positive significant impact on profitability of universal
banks in the Philippines.
Recommendations:
• Focus on the whole banking sector of the Philippines
• Larger sample size
• Research that would emphasize the impact of CSR
disclosure on financial performance of banking sector pre
and post the implantation of the CSR bill if and when it
becomes a law.