Do corporate social responsibility practices affect the relative efficiency of Egyptian conventional and Islamic banks?

Abstract

Purpose

This study assesses the impact of corporate social responsibility (CSR) practices on the relative efficiency of conventional and Islamic Egyptian banks in the period 2012–2018.

Design/methodology/approach

A three-stage approach is adopted. First, data envelopment analysis (DEA) is used to assess the relative efficiency of Egyptian banks. Second, a CSR index is designed and used to assess the extent of aggregate CSR practices in Egyptian banks, together with their sub-dimensions. Third, a Tobit regression model is used to examine the impact of CSR on the technical efficiency of these banks.

Findings

There is no statistically significant difference between conventional and Islamic banks as regards their purely technical efficiency. Egyptian banks, on average, have achieved a medium score in their practices of CSR and conventional and Islamic banks have not shown significant differences, except in 2018. Moreover, the aggregate CSR practices positively affect the technical efficiency of Egyptian banks. The practices of the CSR sub-dimensions, apart from the community sub-dimension, also affect the banks' technical efficiency.

Practical implications

The legislative institutions and the Central Bank should enhance CSR practices in Egyptian banks, particularly the practices related to customers and the community, in order to enhance the purely technical efficiency of these banks.

Originality/value

The paper is original in investigating the impact of CSR on banks' relative efficiency in Egypt.