Corporate Social Responsibility (CSR) in banking: what we know, what we don't know, and what we should know

Corporate Social Responsibility (CSR) in banking: what we know, what we don't know, and what we should know

[Introduction]
The international media is awash with tales of banking scandals ranging from money laundering and rogue trading to interest rate fixing and potential criminal indictment (McDonald, 2012). Coupled with the fallout from the recent international financial crisis, banks have experienced a loss of credibility (Bravo, Matute and Pina, 2012). In the wake of the crisis, the banking industry has been perceived as possessing serious moral flaws and as having engaged in wild speculation (Bennett and Kottasz, 2012). In a recent 34-country survey, financial and banking institutions were ranked alongside the resources sector as industries least likely to behave in a responsible way towards society (European Commission, 2013).

The intense media and public scrutiny focused on the banking industry means that banks are increasingly concentrating on protecting their reputational assets (Soana 2011) and image (Bravo et al., 2012). One of the main avenues for banks to improve their corporate image and re-engage with communities is via a corporate social responsibility (CSR) programme (Pomering and Dolnicar 2009). Banks use CSR as a form of impression management to shape public perceptions and to maintain or create organizational legitimacy (Perez and del Bosque, 2012). For the financial sector, where customer involvement with the service is high, CSR not only positively influences perceptions of the bank, but also service evaluations (Matute-Vallejo, Bravo and Pina, 2011). For banks, involvement in CSR creates customer liking of the bank, positively impacting its reputation for caring (Marin and Ruiz, 2007). CSR also improves banks’ financial performance and reduces potential risks (de la Cuesta-González, Muñoz-Torres and Fernández-Izquierdo, 2006).

The emphasis on CSR as part of a long-term strategy to regain lost reputation and reshape public perceptions accentuates the potential value that may accrue from a review of research findings on CSR practised by banks internationally. This is especially timely as Soana (2011) warns that research results for CSR activities cannot be generalized to all markets and sectors. Consequently, this chapter aims to conduct an integrative review of international empirical research on CSR in the banking industry. The primary goal of an integrative review is to summarize the accumulated state of knowledge concerning the topic of interest and to highlight important issues that research has left unresolved (Taveggia 1974).

The first step in such an investigation is to define the domain of the construct under examination (Albaum and Petersen 1984), in this case, corporate social responsibility (CSR). The second step in the integrative review is to delimit the area of investigation, which is conducted via an analysis of literature published in the research domain (Albaum and Petersen 1984). This research will investigate CSR in banking, conducted via a review of journal articles empirically investigating CSR in the bank marketing literature. Although CSR research is a relatively recent phenomenon, a 20-year period was investigated to ensure that early empirical CSR research in banking was included.

The third step is to summarise the cumulative findings. Therefore, this review has several objectives. To identify:
1. The specific topics and areas that are being investigated, the populations being studied, and the methodologies being employed.
2. The key findings of this research.
3. The specific knowledge gaps that exist, indicating
potential future research directions.

As the third objective seeks to make evident what we should know, after a discussion of the findings, which highlights several important areas that research has left unresolved, this chapter concludes with suggestions for future research directions.

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