Corporate Social Responsibility Expenditure and Financial Performance with Moderating Effect of Ownership Concentration: Evidence from the Pakistani Banking Sector

Abstract

This research explores the interplay between Corporate Social Responsibility (CSR) expenditure and financial firm performance in the Pakistani banking sector, with a particular emphasis on the moderating effect of ownership concentration. Utilizing panel data from 10 major banks listed on the Pakistan Stock Exchange (PSX) over a period from 2014 to 2023, this study employs empirical modeling, including fixed and random effects regression, to determine the influence of CSR investment on financial metrics such as Return on Assets (ROA) and Return on Equity (ROE). The findings indicate a strong positive relationship between CSR spending and financial performance. However, the presence of ownership concentration modifies this relationship, amplifying its positive effects in some cases, while dampening them in others. The implications of this research are critical for bank managers, regulators, and investors aiming to maximize social good alongside financial returns.