The impact of adopting social responsibility in improving the financial performance of the bank: An applied study of a sample of Canadian banks

Abstract

This study aims to show how the social responsibility and its role in the financial performance of the bank through the adoption of indicators of financial performance in some Canadian banks and to come up with results and recommendations that help the management of Iraqi banks to realize the nature of the relationship between the components of social responsibility and financial performance in Canadian banks, the study sample.

The population of this study was represented by the Canadian banks listed on the stock exchange, while the study sample was represented by four Canadian banks. Canadian banks were selected without other banks of other foreign countries as they represent one of the foreign countries most interested in serving the local and external community and the main reason for choosing is because of the availability of digital data for social responsibility in the lists Thus, it provides the appropriate environment to measure social responsibility and its impact on the performance of the financial bank and to study the relationship between them.

The study hypotheses were formulated as follows:-

(H0) There is no significant correlation between social responsibility and the financial performance of the bank.

(H0) There is no statistically significant effect of social responsibility on the financial performance of the bank.

The study was conducted by selecting a sample of Canadian banking organizations with four Canadian banks representing the foreign sector, namely (TD Bank Group, Royal Bank, BMO Financial Group, Scotia bank).

As for the duration of the study, it was fifteen years for the period (2005-2019), according to the annual reports available for the sample banks.

The correlation coefficient (Pearson) was used to analyze the correlations through the statistical program (SPSS V.23), and to analyze the effect of the mediating variable, the statistical program (JASP 0.15) was used.

Thus, the study reached a set of theoretical and field conclusions, and based on the conclusions reached by the study, a set of recommendations consistent with these conclusions were presented.

The most prominent of these conclusions were:

• Through the descriptive analysis of the relationship of social responsibility with financial performance, it appears that there is a positive and statistically significant correlation between social responsibility and each of the debt ratio and the property right multiplier. Social responsibility, cash balance and cash to assets, it was a negative and non-moral relationship.

 The most important recommendations were:

1- The bank management should involve employees in training courses to develop their skills in the field of developing internal social responsibility and community support, especially those who are in direct contact with customers, whether they are department managers or employees in them, in order to be informed of all that is new in the world in the field of services as well as the introduction of improvements And amendments to the service provided, in a manner similar to developments in the services of competing banks and to suit the constantly renewed needs and desires of customers.

2- The necessity for Iraqi banks to enhance their work in the service of society through spending on social responsibility and diversifying social activities as well, which would enable them to obtain a better reputation and good financial performance.