Financial inclusion and financial performance: evaluating the moderating effect of mandatory corporate social responsibility

Abstract

Purpose This study aims to examine the nexus among financial inclusion, legislative corporate social responsibility (CSR) and the financial performance of banking companies in India. Design/methodology/approach The study uses the fixed-effect model to measure the impact of financial inclusion on the financial performance of banks listed in the Bank Nifty Index from 2015 to 2022. Furthermore, it examines the interaction effect of legislative CSR and financial inclusion on the performance of banks. Findings The study shows that financial inclusion indicators positively affect financial performance, which is critical for banking institutions. Empirically, the study provides evidence that legislative CSR is a significant moderator that can influence the relationship between financial inclusion and the financial performance of banks. Practical implications The emerging nations may concentrate on implementing legislative CSR spending to achieve economic value for their firms and societal responsibility toward stakeholders. Originality/value As per the authors’ collective knowledge, this study is the one that extends the empirical evidence that the legislative CSR is a potential moderator which influences the relationship between financial inclusion and the performance of banks.

Financial inclusion: a catalyst for financial system development in emerging and frontier markets

“…Odugbesan et al (2022) affirm that financial inclusion and development indeed promote sustainable development among sub-Saharan African countries. Bhatter and Chhatoi (2023) analyze the interplay between financial inclusion, financial performance and mandatory corporate social responsibility, identifying potential synergies. Inoue (2019) contributes insights by examining the impact of financial inclusion on poverty reduction in India, illuminating the role of inclusive finance in mitigating poverty.…”

“…Odugbesan et al (2022) affirm that financial inclusion and development indeed promote sustainable development among sub-Saharan African countries. Bhatter and Chhatoi (2023) analyze the interplay between financial inclusion, financial performance and mandatory corporate social responsibility, identifying potential synergies.…”

Revisiting long-run dynamics between financial inclusion and economic growth in developing nations: evidence from CS-ARDL approach

“…Fourth, financial inclusion helps the monetary authority control inflation (Mbutor and Uba, 2013; Mehrotra and Nadhanael, 2016). At the same time, financial inclusion also causes financial stability and contributes to growth indirectly (Sethi and Sethy, 2019; Saha and Dutta, 2022; Sethy and Goyari, 2022; Bhatter and Chhatoi, 2023). In contrast, Sahay et al (2015) reported financial inclusion doesn't guarantee financial stability.…”