The Impact of Corporate Social Responsibility on the Cost of Bank Loans

Posted: 5 Jan 2007 Last revised: 1 Dec 2014

See all articles by Allen Goss

Allen Goss

Ryerson University - Ted Rogers School of Management

Gordon S. Roberts

York University - Schulich School of Business

Date Written: August 1, 2009

Abstract

This study examines the link between corporate social responsibility and bank debt. Our focus on banks exploits their specialized role as quasi-insider delegated monitors. We find that firms with the worst social responsibility scores pay up to 20 basis points more than the most responsible firms. However, we find that for the majority of firms, the impact of CSR is not economically important. The modest premiums associated with CSR suggest that banks do not regard corporate social responsibility as significantly value enhancing or risk reducing.

Keywords: corporate social responsibility, socially responsible investing, banking, delegated monitoring, loan pricing, Granger causality, propensity score

JEL Classification: A13, G21, L21, M14

Suggested Citation

Goss, Al and Roberts, Gordon S., The Impact of Corporate Social Responsibility on the Cost of Bank Loans (August 1, 2009). Available at SSRN: https://ssrn.com/abstract=955041

Al Goss (Contact Author)

Ryerson University - Ted Rogers School of Management ( email )

575 Bay Street
Toronto, Ontario
Canada

Gordon S. Roberts

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada
416-736-2100 x77953 (Phone)
416-736-5687 (Fax)

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