CORPORATE SOCIAL RESPONSIBILITY, SOCIAL AND FINANCIAL PERFORMANCE: THE CASE STUDY OF THE LOAN APPRAISAL PROCESS OF THE RWANDA DEVELOPMENT BANK

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Abstract

Development banks play an active role in smoothing growth of world’s disadvantaged areas. The social mission of development banks requires that they pay attention to corporate social responsibility (CSR) and to the social outcome of financing activities. However, like any other financial institution, they must consider the business sustainability and the financial stability over time. Thus, a comprehensive loan appraisal process should include financial and social aspects. Literature does not properly investigate development banks loan appraisal process, thus the aim of this paper is to contribute to this stream of literature, analysing how development banks can include the evaluation of social and environmental variables within their loan appraisal process. For the purpose of the research, we employed a case study of the Rwanda Development Bank (BRD). The BRD loan appraisal process combines the evaluation of typical aspects of corporate social responsibility – like the firms or projects compliance to health and safety regulations or the implementation of the code of ethics including diversity policies – with the evaluation of social and environmental impact, as well with financial aspects. The BRD social impact assessment is also valuable because it follows the criteria of proportionality of loans evaluation, balancing completeness of information with the cost of the assessment.

Keywords: Loan Appraisal Process, Development Bank, Regional Development Bank, Multilateral Bank, Corporate Social Responsibility, Social Impact, Environmental Impact, Financial Performance

JEL Classification: G2, O16

Received: 24.01.2018

Accepted: 12.03.2018

Published online: 20.03.2018

How to cite this paper: Vento, G. A., Chiappini, H., & Lia, G. (2018). Corporate social responsibility, social and financial performance: The case study of the loan appraisal process of the Rwanda Development Bank. Corporate Ownership & Control, 15(3), 47-56. https://doi.org/10.22495/cocv15i3art4