Abstract
This study intended to evaluate association between corporate social responsibility (CSR) and financial
performance of Islamic banks using accounting measures such as ROA, ROE and market-based
performance measure, Tobin’s Q. Carroll’s Pyramid was used to measure the CSR. Secondary data were
collected from the annual reports of 4 full-fledged Islamic banks of Pakistan for a period of five years i.e.
2013-2017. Data were analyzed through Stata software applying GLS to assess the requisite dependence of
financial performance on the diverse dimensions of CSR. Results indicate a significantly positive
relationship between economic responsibilities and financial performance whereas philanthropic and legal
responsibilities have a negative relationship with financial performance. Consequently, it is concluded that
CSR has a somewhat mixed (favourable as well as unfavourable) effect on the financial performance of
Islamic banks. The nature of mixed results may be attributed to the diverse nature of dimensions of CSR.
Therefore, the management of banks is recommended to relocate their resources to increase the financial
performance of their banks.
BURHAN ALI SHAH, KAMRAN NASIR, GHULAM SHABBIR KHAN NIAZI. (2020) Effects of Corporate Social Responsibility on Financial Performance of Islamic Banks in Pakistan, International Review of Management and Business Research, Volume 9, Issue 2.
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