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2, XVIII, 2015
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DOI: 10.15240/ ul/001/2015-2-009
In oduc ion
Recen fi nancial u moil, unce ain and uns able
wo ld and inc easing public p essu e ha e pu
fi nancial sec o and i s esponsibili ies unde
g ea sc u iny. This has led o pu ing mo e
emphasis on social esponsibili y o fi nancial
ins i u ions, p ima ily banks, due o a powe ul
and infl uen ial posi ion hey ha e. Indeed, bank
manage s a e becoming mo e conce ned
wi h social esponsibili y [72], esul ing in
a widesp ead adop ion o social esponsibili y
by he global banking communi y [64].
The conside able emphasis placed
nowadays on he socie al ole o business
is in acco dance wi h he sp eading belie
ha measu es o company success mus go
beyond p ofi and should also ela e o he
needs o s akeholde s and socie y a la ge [68].
Ca oll [12] an icipa ed ha he social aspec
o company’s esponsibili y in he 21s cen u y
will be mo e impo an han e e . Co po a e
social esponsibili y (CSR) is becoming he
defi ning business issue o ou ime, a ec ing
co po a e p ofi s and c edibili y, as well as
pe sonal secu i y and sus ainabili y o he
global economy (see [18], ci ed in [12]). F om
a pe spec i e o companies, social esponsibili y
has become a powe ul ool o gaining mo e
a ou able a i udes among hei s akeholde s
[73], esul ing in a ious benefi s o companies
hemsel es.
Business e hics and communi y suppo
play an impo an ole in a ious indus ies,
including he banking sec o [25]. This ole
is emphasized e en mo e conside ing he
ac ha bank ac i i ies ha e signifi can and
b oad, no only economic, bu also social
implica ions. Social esponsibili y o banks and
o he fi nancial ins i u ions has al eady been
ecognised as necessa y (e.g. [23], [10], [76],
[81], [15]). The ma e ha a ises is how he
banking sec o has and will con inue o e ol e
in his espec . Howe e , social esponsibili y
o banks has been dominan ly in es iga ed in
de eloped coun ies, wi h lack o esea ch in
less de eloped and ansi ion coun ies. While
CSR is ela i ely well es ablished in Wes e n
Eu ope, USA and Aus alia [5], [69], limi ed
unde s anding o CSR and only ecen adop ion
o CSR p ac ices cha ac e ise less de eloped
coun ies. Al hough many au ho s poin ou on
he impo ance o CSR esea ch in de eloping
coun y con ex s ([5], [32], [58], [59]), he e is
a lack o empi ical fi ndings. This s udy ex ends
esea ch in Cen al and Eas e n Eu opean
(CEE) con ex , con ibu ing o sca ce li e a u e
on CSR in hese coun ies (e.g. [42], [40], [47],
[94]). I p esen s a b eak- h ough a emp o
in es iga e de e minan s o CSR in C oa ian
banking indus y.
In spi e o ele ance and imeliness o he
issue, esea ch in C oa ia has been lagging
behind ecen li e a u e on his opic, wi h he
excep ion o only ew no able s udies. Some
o hem p o ide a concep ual amewo k o
social esponsibili y (e.g. [89]), while mos o
he s udies conduc ed ocus on specifi c CSR
issues (e.g. [50], [37], [24]). Some s udies
in es iga e social esponsibili y o companies
om di e en indus ies ([90], [34], [94]), and
social esponsibili y o he banking indus y in
pa icula has been somewha add essed by
Leko and S ojano ic [56], [57], Dujmo ic, e
al. [28] and Kundid and Rogosic [52], howe e
he e s ill exis s a esea ch gap. The e o e,
he pu pose o his pape is o assess social
esponsibili y o C oa ian banks, and mo eo e ,
o in es iga e i s ela ion wi h selec ed ac o s in
he banking indus y.
This s udy links social esponsibili y o
cha ac e is ic ac o s o indi idual banks and
o he en i onmen in which hey ope a e,
i.e. specifi c C oa ian con ex . In pa icula ,
he emphasis is pu on ac o s o bank size,
DETERMINANTS OF BANK
SOCIAL RESPONSIBILITY:
CASE OF CROATIA
Ana I anise ic He naus, Alen S ojano ic
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owne ship s a us and fi nancial pe o mance a
he indi idual le el, linking social esponsibili y
o indi idual bank cha ac e is ics, while a he
indus y le el o C oa ian banking sec o we
c i ically efl ec on bank social esponsibili y by
ocusing on he s uc u e o g an ed loans.
The app oach aken di e s om mos
p e ious s udies because he esea ch is
conduc ed on bo h mic o and mac o le el, which
po en ially o e s a b oade unde s anding o
social esponsibili y in he banking indus y. Ou
aim is o highligh holis ic pe spec i e o bank
social esponsibili y in a pa icula CEE coun y.
Resea ch fi ndings will p o ide addi ional
unde s anding o wha social esponsibili y in
banking means, which ac o s does i ela e o,
and how i wo ks in a specifi c en i onmen .
This pape is s uc u ed as ollows: o s a
wi h, he nex pa p o ides a b ie li e a u e
e iew abou he concep o social esponsibili y
in he banking indus y. Then, hypo heses a e
in oduced, ollowed by esea ch me hodology
a e ha . To ollow, esea ch fi ndings a e
p esen ed. Finally, he implica ions o ou
fi ndings as well as p ac ical s andpoin s a e
discussed, while he pape is concluded wi h
a p esen a ion o he limi a ions and some
u u e esea ch p oposals.
1. Social Responsibili y in he
Banking Indus y
CSR has ne e been mo e p ominen on he
co po a e agenda han i is oday ([85], ci ed
in [41]). I has become a ocal poin o policy
make s and he public, who demand ha
companies assume esponsibili y owa ds
socie y, he en i onmen , o he s akeholde s
in gene al [77]. Companies do ha e social
esponsibili y and a e no p o ec ed by limi ed
liabili y om he consequences o hei ac ions
(see [38]). They ha e he esponsibili y o
hei impac s on socie y, comp ising a ious
en i onmen al, social and economic obliga ions.
As a as i ega ds he banking indus y,
social esponsibili y p ac ices ha e been
emb aced by he global banking communi y,
e idenced by banks pou ing millions o
dolla s in o his pu pose, signing in e na ional
ag eemen s ha suppo socially esponsible
de elopmen [64] and inc easingly epo ing on
hei social esponsibili y. Banks a e beginning
o ecognize ha hey do ha e a social
esponsibili y o ulfi l [6] and ha only socially
esponsible banking is sus ainable in he
long un.
A numbe o ac o s ha e con ibu ed
o a mo e socially esponsible o ien a ion
in banking. The inc eased economic and
public p essu e has o ced banks o analyse
hei ole in socie y and hei con ibu ion o
ob aining mo e sus ainable de elopmen [23].
In pa icula , he ecen economic c isis and
i s social consequences ha e o some ex en
damaged consume confi dence and he le el
o us in fi nancial ins i u ions. Demons a ing
(and no only claiming) esponsibili y owa ds
socie y is c ucial o egaining us , and banks
a e inc easingly ecognizing i . Fu he mo e,
banks hemsel es a e becoming inc easingly
awa e o he isk associa ed wi h fi nancing
en i onmen ally o socially sensi i e p ojec s.
The e o e, in hei lending ac i i ies hey analyse
how o ai ly balance he isk and in e es s o
a ious pa ies a ec ed by hei business.
A a ie y o indus y ends and ac o s a e
also leading o in ensi ying he mo e owa d
socially esponsible banking. The ma ke place
in which banks ope a e oday demands new
solu ions and se ice o e ings. Some o hese
can be deli e ed h ough socially esponsible
p oduc s, whe e ecen ly much o he ocus has
been pu on en i onmen ally-o ien ed p oduc s.
The p essu e is pu on majo in e na ional banks
o fi nd new a eas o g ow h. O he ac o s, such
as consolida ion and heigh ened compe i ion in
adi ional ma ke s, and echnology inno a ions
in banking p oduc s and p ocesses, ha e been
con ibu ing as well.
Due o he na u e o hei ac i i ies and
hei size, bank social esponsibili y is expec ed
o be mo e complex in compa ison o o he
companies. A bank’s esponsibili y ex ends
o go e nmen , cus ome s, sha eholde s,
employees and he communi y [38]. Banks ha e
a key ole in go e nmen ’s aim o s ewa dship o
he economy. As he mos impo an fi nancie s
hey uniquely pe o m unc ions o collec ing
deposi s om wide public, g an ing loans, and
unning he paymen sys em simul aneously.
Addi ionally, hey mus ake ca e o he e hical
aspec s o cus ome ela ionships, as people’s
asse s a e a s ake [25]. Banks a e answe able
o hei sha eholde s because hey ha e
in es ed hei money in he business, a e
en i led o see i p o ec ed and ewa ded by
a ai e u n, and hey also wan o see hei
ins i u ion beha ing in an e hically sa is ac o y
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ashion. Banks depend on people o un hei
business and o efl ec hei e hical s anda ds,
who ha e o know wha is expec ed o hem.
Finally, h ough hei business ac i i ies banks
in es in he well-being o he communi ies hey
se e and hei e e yday decisions ha e a long
e m impac on hose communi ies [38].
The ad an ages and disad an ages o
social esponsibili y in he banking indus y
ha e been a gued a leng h in p e ious
esea ch. Nume ous publica ions ha e shown
ha being socially esponsible can benefi
banks subs an ially [82]. Howe e , as CSR
is impossible o measu e di ec ly, i was
la gely measu ed and assessed h ough
co po a e social pe o mance (CSP). CSP is
a mul idimensional cons uc ha measu es
he ex en o which fi ms a e ac ing (o no
ac ing) in a socially esponsible manne [26]
and he e o e i is used as a means o assess
CSR policies and p ac ices [80]. Va ious CSP
measu es a e used, om one-dimensional
(e.g. en i onmen al pollu ion, co po a e
philan h opy) o mul idimensional measu es,
i.e. indices o a ious CSR indica o s such as
KLD index o Fo une a ings da a, as well as
ques ionnai e based su eys. Con en analysis
o co po a e disclosu es has been also used
in a numbe o academic s udies (e.g. [1], [97],
[32], [65], [91]).
F om banks’ poin o iew, social esponsibili y
in i s comp ehensi e unde s anding is he way
o c ea ing long- e m alue. I enables banks
o ecognize business oppo uni ies and o
manage isk mo e e fi cien ly. I imp o es hei
epu a ion and b anding, by infl uencing us
and cus ome pe cep ions (e.g. [73], [66]).
Awa eness o esponsibili y owa ds socie y
and en i onmen gua an ees compliance
wi h go e nmen egula ions. Finally, i o e s
as po en ial o imp o e and de elop banks’
own se ices, e.g. in as -g owing a eas
o sus ainable ene gy, cleane p oduc ion,
biodi e si y conse a ion and banking se ices
o low-income and unde se ed g oups [43].
2. Resea ch Goal and Hypo heses
The aim o he esea ch is o assess o wha
ex en a e C oa ian banks socially esponsible
and o in es iga e se e al key ac o s ha
po en ially ela e o hei social esponsibili y.
In o de o achie e he esea ch goal, ou
hypo heses a e p oposed. Fi s h ee hypo heses
ocus on de e mining he ela ion be ween bank
social esponsibili y and i s indi idual ac o s, in
o de o disco e which banks a e mo e likely o
be socially esponsible. In pa icula , we ocus
on ac o s o bank size, owne ship s a us and
fi nancial pe o mance. While ac o s o size
and fi nancial pe o mance ha e al eady been
se as impo an and in es iga ed in p e ious
esea ch on social esponsibili y, we fi nd he
ac o o owne ship s a us in e es ing, aking
in o conside a ion specifi c owne ship s uc u e
o C oa ian banking sec o . Fou h hypo hesis
s i es owa ds es ing he ela ion o social
esponsibili y and he s uc u e o g an ed loans
in C oa ian banking sec o , a he indus y le el.
The easoning behind including he ac o o
he loan s uc u e in he analysis is ha i is
po en ially e y indica i e o indus y’s social
(i ) esponsibili y, because some impo an
conclusions can be d awn om he ocus o
bank lending ac i i y.
Among a ious bank-le el a ibu es ha
a e likely o be ela ed o i s social esponsibili y,
one o he key issues is fi m size, iden ifi ed
as bo h i al and ela i ely unexamined [59],
[97]. Majo i y o exis ing li e a u e indica es
a posi i e link be ween fi m size and le el o
social esponsibili y (e.g. [87], [14], [67], [88],
[54]), and only some e e s specifi cally o he
banking indus y (e.g. [81], [65]).
In gene al, la ge fi ms a e associa ed
wi h mo e esou ces ound o posi i ely a ec
hei CSR commi men [96], [45]. They also
end o be mo e isible, implying acing mo e
p essu es and highe le el o a en ion om
he gene al public (see [92]), o pa icipa e in
olun a y p og ammes (e.g. [7]) and make
dona ions (e.g. [2]). La ge o ganisa ions may
also ha e mo e ad anced in e nal sys ems
o dealing wi h he managemen o issues,
leading o g ea e esponsi eness o social
issues as well ([8], ci ed in [92]). Because
o nume ous ex e nal and in e nal easons,
a posi i e ela ion be ween bank size and social
esponsibili y is expec ed. The ques ion a ises
whe he his is also ue in C oa ian case. The
poin o iew aken is ha la ge banks ha e
mo e esou ces o ain employees abou
social and en i onmen al issues, o in es in
assessmen and echnological solu ions o
minimize en i onmen al impac and p o ec
wo ke sa e y, and o implemen ele an social
and en i onmen al managemen p ocedu es.
La ge banks ha e also mo e esponsibili y
o beha e esponsibly due o hei isibili y
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and b and image. They will disclose mo e
in o ma ion on social esponsibili y han smalle
banks [39]. We adop his iew and based on i
we p esen ou fi s hypo hesis:
H1: Bank size and social esponsibili y a e
posi i ely ela ed.
Al hough nume ous s udies ha e ecen ly
been published examining de e minan s
o CSR, a ela i ely small numbe o hem
conside owne ship as an independen a iable.
Mos o hem examine ela ions be ween social
esponsibili y and ins i u ional owne ship,
manage ial owne ship, owne ship s uc u e
dispe sion o ins i u ional in es o ypes (e.g.
[93], [16], [99], [36], [45], [59], [48]). Howe e ,
e y ew ake in o conside a ion owne ship
s a us. In his ega d Lee [55] ocuses on
public and p i a e owne ship s a us, while Qu
[74] and Oh, e al. [69] in oduce a a iable
o o eign owne ship. Qu [74] assumes ha
he e ec does exis , while esea ch esul s
o Oh e al. [69] indica e a signifi can , posi i e
ela ionship be ween o eign owne ship and
CSR, sugges ing ha di e en owne s may
also ha e di e en o ien a ions and p e e ences
ega ding he fi m’s CSR. This esea ch gap
calls o u he esea ch on he ela ionship
be ween di e en s a us o owne ship and fi m’s
social esponsibili y.
In spi e o he ac ha exis ing li e a u e
indica es ha o eign owne ship is associa ed
wi h sus ainabili y [51] and wi h highe le el
o CSR, Oh e al. [69] clea ly indica e ha all
o eign in es o s a e no always in a ou o
CSR. Howe e , we can ag ee wi h Hinson e
al. [39] ha in e na ional banks a e expec ed
o disclose mo e o hei social esponsibili y
in o ma ion han local banks, due o hei
in e na ional p esence and image, due o being
subjec o in e na ional con en ions, as well as
o egula ions ha make hei disclosu es mo e
manda o y. This is u he ein o ced by he
na u e o hei ac i i ies, o in e na ionaliza ion,
which equi es hem o communica e such
esponsibili ies o socie y [9].
In C oa ia, almos 50% o banks in e ms o
hei numbe a e o eign-owned, and in e ms
o o al banking indus y asse s, mo e han 90%
is in o eign owne ship. C oa ian banks which
a e owned by la ge in e na ional bank g oups
a e expec ed o disclose mo e o hei socially
esponsible p ac ices and in ha espec o be
mo e socially esponsible han local banks. This
is due no only o men ioned easons, bu also
o a know-how hey ecei e om hei o eign
pa en companies, which al eady p o ed o be
a mo e ad anced in demons a ing hei social
esponsibili y han banks ope a ing only on
C oa ian ma ke . In his con ex we s ipula e ou
second hypo hesis as ollows:
H2: Fo eign-owned banks a e cha ac e ized
by highe le els o social esponsibili y in
compa ison o domes ically owned banks.
A majo s eam o esea ch has esul ed om
e o s o unde s and he ela ionship be ween
social pe o mance and fi nancial pe o mance
ha exis s o companies [3], esul ing in
posi i e (e.g. [96], [79], [94]), nega i e (e.g. [44],
[46], [61]) and mixed e idence (e.g. [17], [16],
[4]). Mos o he s udies o he banking indus y
documen a posi i e link be ween hese wo
cons uc s (e.g. [84], [42], [81], [65]).
The ela ionship be ween co po a e social
and fi nancial pe o mance emains one o he
mos a ac i e esea ch opics [35]. Tha his
collec i e esea ch is la ge and impo an is
e idenced in pa by se e al majo s udies
aimed a e iewing and analyzing he esul s
o his accumula ing esea ch (e.g. [71], [62],
[95], [70]). Besides he impo ance o empi ical
in es iga ions o his ela ionship, Callan and
Thomas [11] s ongly emphasize i s imeliness,
because oday, pe haps mo e han e e , fi ms
a e expec ed o dedica e esou ces o socially
esponsible ac i i ies.
Undoub edly, a g owing body o empi ical
e idence sugges s ha co po a e social and
fi nancial pe o mance a e posi i ely ela ed.
Despi e a la ge and g owing li e a u e on CSR,
he e is e y li le e idence o fi ms ac ually
sac ifi cing p ofi s in he social in e es [75]. And
his is pa icula ly ue o he banking indus y.
In o de o de e mine he exis ing social
esponsibili y o C oa ian banks, we es he
ollowing hypo hesis by app oxima ing fi nancial
pe o mance wi h p ofi abili y:
H3: Bank p ofi abili y and social esponsibili y
a e posi i ely ela ed.
Finally, a mo e comple e unde s anding o
bank social esponsibili y can be ob ained by
pu ing i in o specifi c con ex . This is possible
by aking in o conside a ion cha ac e is ic
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ac o s o C oa ian banking indus y, whe e
we pa icula ly ocus on dedica ed s uc u e
o g an ed loans. Specifi c s uc u e o g an ed
bank loans is efl ec ed in a ela i ely high sha e
o non-p oduc i e loans o fi nal consump ion
in o al g an ed loans o he mos impo an
ins i u ional sec o , i.e. households.
As Snoy [86] a gued, e hical issues ha
fi nancial in e media ies, especially comme cial
banks, in he in e na ional sphe e ace a e o
whom does one lend and o wha pu pose does
one lend. Issues in C oa ian banking sec o ,
due o a high pe cen age sha e o o eign
owne ship, can be much associa ed wi h issues
o in e na ional banking. In hei in e na ional
loans, banks equen ly and legi ima ely aim
a suppo ing na ional expo s o equipmen s
and enginee ing se ices. Howe e , his does
no exemp hem om esponsibili y on he
pa o he bo owing coun y o impo hese
goods and se ices, nei he on he pa o fi nal
consume s, i.e. bank cus ome s o buy o e -
sized fi nancial se ices poo ly adap ed o local
condi ions.
While mos o he academic s udies ocus
on o he de e minan s o social esponsibili y
such as p ofi abili y, size o owne ship (e.g.
[53]), he e is a g ea lack o li e a u e which
would ela e he s uc u e o g an ed loans o
social esponsibili y o a bank. The eason o
his migh be he ac ha mos o he s udies on
CSR in he banking indus y we e conduc ed in
he mos de eloped coun ies, whose banking
sys ems do no ace such issues. Fo example,
banks in CEE coun ies a e cha ac e ised by
a ela i ely la ge sha e o o eign owne ship in
compa ison o mos de eloped coun ies, which
in he Cen al Eu ope (CE) sub- egion s ands,
on a e age, a 75% and in he Sou heas e n
Eu ope (SEE) sub- egion a a e y high 85%
o o al banking sec o asse s [27]. So ce ain
issues occu exac ly now, when s udies on CSR
in less de eloped and ansi ion coun ies ha e
eme ged and consequen ly addi ional, specifi c
ac o s gain on ele ance, such as, o example,
he sha e o loans o fi nal consump ion in
o al bank loans g an ed o ins i u ional sec o
o households. Taking in o conside a ion all
men ioned abo e, we ecognize his ac o
as impo an and we ela e i o bank social
esponsibili y. As he g an ed loan s uc u e in
C oa ia has been ex emely un a ou able o
a numbe o yea s, because o i s o ien a ion on
pe sonal consump ion, while la gely neglec ing
p oduc ion and de elopmen , we p opose he
ollowing hypo hesis:
H4: Sha e o loans o fi nal consump ion in o al
bank loans g an ed o households is nega i ely
ela ed o social esponsibili y in he banking
indus y.
3. Resea ch Me hodology
This pa desc ibes he esea ch done a
wo di e en le els, da a collec ion on bank
social esponsibili y, how he CSP measu e is
calcula ed and esea ch me hods used o es
hypo heses.
Due o a mul i-le el na u e o he planned
esea ch, we ha e o clea ly de e mine
wo di e en le els o analysis – indi idual
and indus y. In o de o es he fi s h ee
hypo heses, we need o add ess indi idual
bank social esponsibili y. The o h hypo hesis
is ela ed o he agg ega e, banking indus y
social esponsibili y in a specifi c C oa ian
con ex . I is ocused on he s uc u e o g an ed
loans, whe e he eu o a ea a e age is used as
a benchma k.
As epo ing on social esponsibili y is
no ye s anda dized, indi idual-le el da a o
banks was collec ed du ing Oc obe 2011
by de ailed insigh in all publicly a ailable
in o ma ion and documen s on banks’ web
si es such as bank’s sus ainabili y, CSR o
social epo s, epo s on p og ess, pe iodical
epo s on pe o mance, codes o conduc
and o he web-based in o ma ion, as well as
in o ma ion om na ional (C oa ian Na ional
Bank, C oa ian Banking Associa ion, C oa ian
Business Council o Sus ainable De elopmen ,
C oa ian Banking and Finance Employees
T ade Union) and in e na ional o ganiza ions
and NGOs (Global Compac ). This me hod
o da a collec ion is jus ifi ed because
nowadays he in e ne is used as a medium
o co po a e in o ma ion disclosu e o he
public [39]. Necessa y addi ional in o ma ion
was collec ed ia elephone in e iews wi h
bank ep esen a i es. Con en analysis is used
o measu e he le el o social esponsibili y in
acco dance wi h p esen ed amewo k. Defi ned
as a echnique o ga he ing da a ha consis s
o codi ying quali a i e in o ma ion in anecdo al
and li e a y o m in o ca ego ies in o de o
de i e quan i a i e scales o a ying le els o
complexi y [1], i is ound o be he app op ia e
me hod o iden i ying hemes in he aw da a
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122 2015, XVIII, 2
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[13]. A he banking indus y le el, he main
sou ce o in o ma ion we e publica ions issued
by he C oa ian Na ional Bank.
In o de o assess social esponsibili y o
indi idual banks, we e alua e banks wi h espec o
a ious indica o s, enabling a holis ic s akeholde
app oach, e iden in ecen de elopmen s in
CSR p ac ice [63]. The amewo k o assessing
bank social esponsibili y is de i ed and adap ed
om p e ious esea ch conduc ed by Cues a-
Gonzalez, e al. [23] and Schol ens [81]. The
main eason why hese s udies a e aken as
a e e ence poin is ha hei me hodology,
con a y o some o he a ailable app oaches, is
anspa en and easily measu able.
The e a e fi e g oups o indica o s: 1)
sus ainabili y epo ing and ne wo king, 2)
co po a e go e nance, 3) en i onmen al
managemen , 4) esponsible fi nancial p oduc s
and 5) s akeholde issues. These g oups efl ec
di e en aspec s o social esponsibili y and
al oge he p o ide a comp ehensi e iew o
bank social esponsibili y.
By epo ing and ne wo king, which migh
also equi e compliance wi h ce ain s anda ds
on epo ing (e.g. UN Global Compac ), we
conclude ha a bank commi s i sel o socially
esponsible beha iou . Co po a e go e nance
gi es an indica ion o policies and p ocedu es
p omo ed by he bank and communica ed o all
employees. T anspa ency abou en i onmen al
pe o mance allows us o assess how a bank
ope a es in his espec [81], analysed h ough
indica o s o en i onmen al isk managemen in
lending policy and exclusion o specifi c sec o s
in bank fi nancing ac i i ies (e.g. p oduc ion
causing ecological damages). The supply and
de elopmen o “g een” o socially esponsible
p oduc s is ano he means by which a bank can
signal i s commi men o social esponsibili y
(see [81]). Finally, s akeholde issues
comp ising ela ionships wi h employees and
he communi y efl ec social conduc o a bank,
bo h in e nally and ex e nally.
We made ce ain adap a ions o Cues a-
Gonzalez e al. [23] and Schol ens’ [81]
assessmen amewo k. On he basis o
in e iews wi h subjec ma e expe s, we
selec ed 18 indica o s ele an o desc ibing
socially esponsible p ac ices o C oa ian
banks. Some o he o iginal indica o s a e no
e en a ailable in banks’ published documen s,
as social awa eness o C oa ian banks is s ill in
he ea ly s age o de elopmen . In o de o es
he alidi y o in e iews’ esul s, p elimina y
con en analysis o banks’ publica ions was
conduc ed. I confi med he selec ed 18
indica o s, which we e hen analysed o each
bank. Table 1 shows which indica o s a e used
o assess indi idual bank social esponsibili y.
G oup Indica o Ope a ionaliza ion
Sus ainabili y epo ing and
ne wo king
1 Sus ainabili y epo / CSR epo /
Social epo Yes (1) o No (0)
2 Global Repo ing Ini ia i e Adop ed (Yes/No)
3 UN Global Compac C oa ia Adop ed (Yes/No)
4 C oa ian Business Council o
Sus ainable De elopmen Membe (Yes/No)
5 C oa ian Banking Associa ion Membe (Yes/No)
6 CSR Index Pa icipan (Yes/No)
Co po a e go e nance 7 Code o E hics / Code od Conduc Adop ed (Yes/No)
8 Code o Co po a e Go e nance Adop ed (Yes/No)
9 Di e si y Women on boa d (Yes/No)
En i onmen al managemen 10 En i onmen al isk managemen in
lending policy Yes/No
11 Exclusion o specifi c sec o s Yes/No
Responsible fi nancial
p oduc s 12 Socially esponsible in es ing Yes/No
Tab. 1: Bank social esponsibili y amewo k – Pa 1
Sou ce: Adop ed om Cues a-Gonzalez, e al. [23] and Schol ens [81]
EM_2_2015.indd 122EM_2_2015.indd 122 3.6.2015 13:09:053.6.2015 13:09:05
123
2, XVIII, 2015
Finance
Ope a ionaliza ion o he indica o s is he
ollowing: i he bank pe o ms o complies, i
ecei es a posi i e sco e (1), o he wise ze o (0).
Such me hodology is used in o he academic
s udies as well (e.g. [81], [49], [78]). When
banks do no epo o be ac i e wi h espec o
some issue, we assume hey a e no , because
i is exac ly he anspa ency abou social and
en i onmen al pe o mance ha allows us o
assess how a bank ope a es in his espec
(see [81]). The easoning behind his is ha i is
becoming clea he e ough o be a anspa en
and e ifi able commi men o adop ion o socially
esponsible p ac ices. Gene ally, a p inciple
o anspa ency is a cons i uen pa o e hics
applied in managemen and in economic
decision-making [83]. And his is accomplished
by explici e e ence o social esponsibili y wo k
banks a e engaged in ia epo ing and publishing
web-based in o ma ion [29]. Communica ing
ac i i ies and esul s is especially impo an o
banks, because hei business depends on hei
c edibili y, and on he us hei s akeholde s
ha e in hem [43]. In o he wo ds, clea , open
and ho ough communica ion is an in eg al pa
o a bank social esponsibili y.
The de eloped amewo k is applied o
a popula ion o 32 C oa ian banks. As hese
banks make he whole C oa ian banking sec o ,
hey a e he bes possible ep esen a ion o
a banking indus y in a pa icula coun y. Six
la ge banks, h ee medium-sized and wen y-
h ee small banks a e included in he s udy.
La ge bank in C oa ia is a bank wi h indi idual
asse s la ge han 5% o o al banking indus y
asse s, medium bank is a bank wi h indi idual
asse s la ge han 1% and smalle han 5% o
o al banking indus y asse s, and small bank is
a bank wi h indi idual asse s smalle han 1%
o o al banking indus y asse s (amoun ing o
EUR 53.00 billion in 2010). Fi een o he banks
a e in o eign, while se en een a e in domes ic
owne ship. Social esponsibili y o he obse ed
banks is assessed and empi ically ela ed
fi s ly o indi idual, bank-le el ac o s (size,
owne ship s a us and fi nancial pe o mance) by
using co ela ion analysis, and hen o indus y-
le el ac o (dedica ed g an ed loan s uc u e)
quali a i ely.
4. Resea ch Findings
Some gene al conclusions ha can
be d awn om desc ip i e s a is ics (see
Tab. 2) a e ha C oa ian banks accomplish
he highes sco es o social esponsibili y in
co po a e go e nance ( ela i e a e age sco e
o 53.1%) and s akeholde issues (51.3%)
among all g oups o indica o s. In oducing
G oup Indica o Ope a ionaliza ion
13 Sus ainabili y p oduc s („G een
loans“, „Ene gy e fi ciency loans“) Yes/No
S akeholde issues
Employee issues 14 T aining and educa ion Yes/No
15 T ade unions Ac i i ies o CBFETU (Yes/No)
16 Feedback om employees Anonimous, including all
employees (Yes/No)
In ol emen in he communi y
and commi emen o
cha i able wo k
17 Sponso ing and dona ions Yes/No
18 C oa ian Banking Associa ion
wo kshops Pa icipan (Yes/No)
CSR Index = a p ojec o assessmen o C oa ian companies’ social esponsibili y, ini ia ed by C oa ian Chambe o Eco-
nomy and C oa ian Business Council o Sus ainable De elopmen , whe e a company’s social esponsibili y is assessed
acco ding o me hodology o UK’s leading benchma k o co po a e esponsibili y – Business in he Communi y Index;
CBFETU = C oa ian Banking and Finance Employees T ade Union
Sou ce: Adop ed om Cues a-Gonzalez, e al. [23] and Schol ens [81]
Tab. 1: Bank social esponsibili y amewo k – Pa 2
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124 2015, XVIII, 2
Finance
esponsible fi nancial p oduc s (12.5%) is leas
common among hem. Possible explana ion
o his could be ha he banks ha e al eady
ecognized po en ial ma e iali y o ce ain
social, en i onmen al and go e nance issues,
while hey s ill do no use, a fi s sigh less
ob ious, benefi s a ising om o he issues. Fo
example, benefi s om sus ainabili y epo ing
and ne wo king may a ise in a medium- o long-
e m, o , he banks a e simply s ill no awa e o
a necessa y expansion o fi nancial p oduc s’
o e , imposed no only by new indus y ends
bu also by egula ion (i.e. egula ion ega ding
en i onmen p o ec ion and ene gy e fi ciency).
Nex , he na u e o ela ion be ween bank-
le el ac o s and i s social esponsibili y was
in es iga ed by using co ela ion analysis.
Table 3 shows co ela ion coe i cien s () o
social esponsibili y o C oa ian banks and
ac o s o size, owne ship and p o i abili y. No
su p isingly, ou esea ch i ndings suppo he
i s hypo hesis as i is clea ha a high posi i e
co ela ion be ween bank size and social
esponsibili y is es ablished ( = .640, p = .000,
N = 32), leading o a conclusion ha la ge
banks, in e ms o hei asse s, a e associa ed
wi h highe le els o social esponsibili y.
A mo e de ailed analysis shows ha
medium-sized banks closely ollow la ge banks,
and in some aspec s o social esponsibili y,
like sus ainabili y epo ing and ne wo king
and co po a e go e nance, e en sligh ly
Bank
1234567891011121314151617181920212223242526272829303132
Social esponsibili y
111000011000010000000000000000000
210000000000010000000000000000000
301000010000010000000000000000000
410000000000010000000000000000000
511111111111011110001001011000000
601100001000010010000000000000000
711001111001011000000000001100001
811100011011111110001111101000110
911111111110101110101110000001000
1011001111001010000000100000100101
1111001101001010000000100000000101
1201000000000000000000000000000000
1311100001000011100000000000000000
1411111111111111110000000111100111
1510110111011101011001010010101000
1611100101000010000000000000100000
1711111111111111010000100110100111
1811111111101001010000000010000000
T 83835633445661782833502878502244 6 6 0 2228171117282233 0 11281728
Social esponsibili y: numbe ela es o indica o defi ned in Table 1; Bank: numbe ela es o each o he
32 banks; T = o al sco e (pe cen age), calcula ed as a ela i e numbe o indica o s on which a bank
sco es posi i e, e.g. he bank assigned numbe 1 ecei es a sco e o 83% because T=15/18=0.83.
Sou ce: au ho s
Tab. 2: Indi idual bank social esponsibili y esul s
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125
2, XVIII, 2015
Finance
su pass hem. On he o he hand, small
banks a e e iden ly lagging behind al hough
hei ela i ely lowe a e age sco es in
ce ain aspec s o social esponsibili y can be
easonably expec ed. Fo ins ance, small banks
in hei e e yday business, in compa ison
o la ge banks, do no ace challenges o
fi nancing la ge, en i onmen ally o socially
sensi i e p ojec s. This may explain hei
a e age sco e in en i onmen al managemen
o only 23.9%. Fu he mo e, hey a e o ien ed
on e ail business and se ing local communi y,
p ima ily by fi nancing consume loans and
liquidi y o small and medium en e p ises.
The e o e, he s uc u e o hei o e is di e en
om he one a la ge banks, wha possibly
explains hei a e age sco e o only 6.5% o
esponsible fi nancial p oduc s. Howe e , hei
bad pe o mance in o he aspec s o social
esponsibili y, indica ed by low a e age sco es
in o he g oups o indica o s, canno be so
easily jus ifi ed.
Fu he mo e, owne ship s a us and social
esponsibili y o obse ed banks a e ai ly
co ela ed ( = -.480, p = .005, N = 32). (In o de
o quan i a i ely analyse a iable owne ship
s a us, o eign-owned banks we e assigned
gene ic numbe 1, banks in domes ic p i a e
owne ship numbe 2, and banks in domes ic
public owne ship numbe 3.) The medium and
nega i e co ela ion be ween hese a iables
poin s ou ha o eign-owned banks ope a ing
in C oa ia in e ms o hei le els o social
esponsibili y a e in ad ance o banks owned
by domes ic pa ies. This is in acco dance wi h
he second hypo hesis, p oposing ha o eign-
owned banks a e cha ac e ized by highe
le els o social esponsibili y in compa ison o
domes ically owned banks.
Resul s o an in-dep h analysis indica e ha
o eign-owned banks, wi h hei a e age sco e
o 48.9%, pe o m be e han domes ically
owned banks (21.9%) in all aspec s o social
esponsibili y. Mo eo e , a pa ial analysis o
he wo g oups o domes ically owned banks
was conduc ed, di e en ia ing be ween hose
owned by p i a e pa ies and hose owned
by he go e nmen . This analysis shows ha
banks in domes ic p i a e owne ship (a e age
sco e o only 20.4%), wi h he only excep ion
o esponsible i nancial p oduc s o e , lag
behind hei domes ic go e nmen -owned
coun e pa s, indica ing ha he go e nmen ,
as a bank owne , is ela i ely mo e socially
esponsible in compa ison o p i a e pa ies a
he same unc ion. Howe e , as a as i ega ds
banks in domes ic go e nmen owne ship, one
has o ake in o conside a ion ha he e a e
only wo such banks in he sample, wha makes
social pe o mance o hese speci i c banks
(33.3%) po en ially ha dly gene alisable in
o he con ex s. The e o e, i is mo e ad isable
o obse e hem as a speci i c g oup.
Finally, he fi ndings indica e a e y weak and
posi i e co ela ion be ween bank p ofi abili y
and social esponsibili y, meaning ha he e
is li le o almos no associa ion be ween bank
p ofi abili y and i s le el o social esponsibili y.
Howe e , he esul s a e no s a is ically
signifi can , so hey canno be gene alized.
Weak and non-signifi can co ela ion leads us
o ejec he hi d hypo hesis, meaning ha he e
is no empi ical e idence ha bank fi nancial and
social pe o mance a e posi i ely ela ed.
Social
esponsibili y Size (Asse s) Owne ship
s a us
P ofi abili y
(ROA)
P ofi abili y
(ROE)
Social esponsibili y 1
Size (Asse s) .640** 1
Owne ship s a us -.480** -.410* 1
P ofi abili y (ROA) .228 .340 -.121 1
P ofi abili y (ROE) .218 .289 -.186 .923* 1
ROA = Re u n on asse s; ROE = Re u n on equi y
**Co ela ion is signifi can a he 0.01 le el (2- ailed).
*Co ela ion is signifi can a he 0.05 le el (2- ailed).
Sou ce: au ho s
Tab. 3: Co ela ion coe fi cien s o le el o bank social esponsibili y and selec ed bank
ac o s
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132 2015, XVIII, 2
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Ana I anise ic He naus, PhD
Uni e si y o Zag eb
Facul y o Economics and Business
Depa men o Finance
ai anise[email p o ec ed]
Alen S ojano ic, PhD
Uni e si y o Zag eb
Facul y o Economics and Business
Depa men o Finance
[email p o ec ed]
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134 2015, XVIII, 2
Finance
Abs ac
DETERMINANTS OF BANK SOCIAL RESPONSIBILITY:
CASE OF CROATIA
Ana I anise ic He naus, Alen S ojano ic
Recen ly i nancial sec o and i s esponsibili ies ha e come unde g ea sc u iny. This has led o
pu ing mo e emphasis on social esponsibili y o i nancial ins i u ions, p ima ily banks, due o hei
powe ul and in l uen ial posi ion. Banks ha e an impac no only on i nancial and economic sys em,
bu on a wide communi y as well. Thei socially esponsible p ac ices in pa icula may ha e
impo an social implica ions, wha is e en mo e emphasized wi hin bank-cen ic i nancial sys ems,
ypical o CEE coun ies. Due o a lack o exis ing esea ch, he aim o he pape is o assess social
esponsibili y o banks a indi idual and indus y le el in a speci i c CEE con ex . A bank indi idual
le el, ocus is pu on ac o s o bank size, owne ship s a us and i nancial pe o mance, while a he
bank indus y le el he s uc u e o g an ed loans is included in he analysis. The amewo k o
assessing bank social esponsibili y is de i ed and adap ed om p e ious esea ch conduc ed by
Cues a-Gonzalez, e al. [23] and Schol ens [81]. I is applied o C oa ian banking sec o , while he
le el o social esponsibili y is empi ically ela ed o ac o s a bank indi idual and indus y le el.
Resea ch i ndings o e an o e iew o social esponsibili y o C oa ian banks. The esul s
demons a e ha bank social esponsibili y is ela ed o ac o s o bank size and owne ship s a us
a he indi idual le el, and o he s uc u e o g an ed loans a he indus y le el. Howe e , he
na u e o he link be ween bank social and i nancial pe o mance did no p o e signi i can . Such
i ndings o e a wide lesson o wha ac o s a e associa ed wi h social pe o mance o i nancial
sec o . Addi ionally, hey may se e as a use ul e e ence poin o u he in es iga ion o socially
esponsible p ac ices in C oa ia and o he CEE coun ies.
Key Wo ds: Banks, social esponsibili y, C oa ia.
JEL Classi i ca ion: G21, M14.
DOI: 10.15240/ ul/001/2015-2-009
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