The effect of political connections on CSR performance in the banking sector

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The financial crisis was followed by a revived interest in corporate social responsibility (CSR) principles within the banking sector. CSR should make the banking sector more ethically aware and transparent (Krasodomska, 2015), potentially benefiting society as a whole and benefit the firm. Consequently, it would seem relevant to examine what factors determine the level of CSR performance in in the financial sector. While there is abundant literature on the determinants of CSR performance, this research will add to the existing literature by introducing political connections as a potential determinant of CSR performance in OECD countries. Specifically, this thesis addresses the effect of political connections CSR performance in the banking sector. Additionally, this thesis assesses whether the strength of environmental policy stringency in different countries positively moderates this relationship. Using a sample of 151 banks from OECD countries, over an 8-year period, overall the findings support the idea that political connections do not influence corporate social responsibility performance within the banking sector. Environmental policy stringency negatively affects the relationship between political connections and CSR performance, however this result is not robust. Keywords: Political Connections, Corporate Social Responsibility Performance, Environmental Policy Stringency
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