The Link between Corporate Social and Financial Performance. An Investigation in the Swedish Banking Sector.

Abstract

The relationship between corporate social and financial performance has been a popular field of study almost for 30 years. This study is providing theoretical and empirical knowledge of the link between corporate social and financial performance in the Swedish banking sector. Based on literature and previous studies the expected result of this study in the form of research hypothesis is The link between corporate social responsibility and financial performance in the Swedish banking industry is positive. The sample of this study consists of 25 Swedish commercial banks. These banks are divided into two categories, outstanding and needs to improve, according to their social performance. Means of the two financial performance variables, return on assets and loan losses to total loans, are calculated for both of the social performance groups in 2003 and 2004. The statistical difference between these two group means is studied by using Mann-Whitney U test and t-test. The empirical results of this study do not support strongly enough the research hypothesis and therefore the conclusion of the study is that there is no link between corporate social and financial performance in the Swedish banking industry. On the other hand one of the variables supports the positive link, providing interesting opportunities for further research.