Beyond goodwill: Examining the corporate social responsibility-operational efficiency nexus in the context of sustainable banking

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Abstract

The current research explores how corporate social responsibility (CSR) initiatives relate to the performance of Indian banks. With increasing regulatory emphasis on CSR spending, understanding its influence on bank operational efficiency is crucial. The research estimates efficiency levels of 27 National Stock Exchange of India Limited (NSE) listed banks from 2015 to 2020 and explores the CSR-efficiency relationship. For attaining these objectives, the study adopts a two-stage approach. Firstly, the Banker–Charnes–Cooper data envelopment analysis (BCC-DEA) model is employed to evaluate the operational efficiency. Secondly, Tobit regression analysis is considered to estimate the CSR investments’ impact on bank efficiency. The research reveals that private sector banks outperform public banks in both CSR engagement and operational efficiency. Tobit results exhibit a positive association between CSR spending and bank efficiency, indicating that CSR enhances intermediation processes and financial outcomes. Based on these findings, the study infers that embedding CSR within fundamental business strategies can deliver a twofold advantage —boosting social impact while also improving financial performance. The study’s implications hold significant value for bankers and policymakers in India. Bank managers need to focus on improving scale efficiency to enhance operational efficiency. Policymakers can encourage CSR investment by offering regulatory incentives, benefiting banks, customers, and society.

Keywords: Indian Banks, CSR, Operational Efficiency, DEA, Tobit

Authors’ individual contribution: The Author is responsible for all the contributions to the paper according to CRediT (Contributor Roles Taxonomy) standards.

Declaration of conflicting interests: The Author declares that there is no conflict of interest.

JEL Classification: G21, G23, M14

Received: 08.04.2025
Revised: 22.04.2025; 14.05.2025; 22.09.2025
Accepted: 13.10.2025
Published online: 16.10.2025

How to cite this paper: Barman, N. (2025). Beyond goodwill: Examining the corporate social responsibility-operational efficiency nexus in the context of sustainable banking [Special issue]. Corporate Governance and Sustainability Review, 9(3), 287–296. https://doi.org/10.22495/cgsrv9i3sip9