To read this content please select one of the options below:

Corporate social responsibility and financial stability: evidence from the Troubled Asset Relief Program

Elizabeth Cooper (Department of Finance, La Salle University, Philadelphia, Pennsylvania, USA)
Christopher Henderson (Federal Reserve Bank of Philadelphia, Philadelphia, Pennsylvania, USA)
Andrew Kish (Federal Reserve Bank of Philadelphia, Philadelphia, Pennsylvania, USA)

Managerial Finance

ISSN: 0307-4358

Article publication date: 10 May 2019

Issue publication date: 15 August 2019




The purpose of this paper is to test the impact of corporate social responsibility (CSR) in the banking industry using Troubled Asset Relief Program (TARP) as an experimental backdrop.


The authors match banks that received TARP with CSR data on publicly available firms. Using this data set, the authors are able to perform both univariate and multivariate analyses to determine the impact of CSR on bank management behavior.


The authors find evidence that supports stakeholder theory as applied to a sample of large financial institutions. The authors show that banks increased their CSR involvement and intensity following TARP, evidence that CSR is not merely transitory in nature but structural and an important aspect of firm value. The authors also find that capital ratios increase to a greater degree in banks whose CSR ratings were stronger prior to TARP. Finally, while all banks in the sample repaid Treasury, it took strong CSR banks a longer time to repay than banks with weaker CSR. The authors show how CEO compensation played a role in this relationship.

Research limitations/implications

The findings are limited to large banks.

Practical implications

Practically speaking, this study helps to discern the motivations and actions of large financial institutions. This is especially important from a regulator perspective, whose function is to maintain overall national financial stability.


This is the first study to link TARP and CSR literatures. Overall, there are a limited number of studies on CSR in the banking industry, and this paper adds to this burgeoning area. It is important and valuable to managers and policymakers to understand implications of CSR in the financial sector.



The views expressed are those of the authors and do not necessarily reflect the position of the Federal Reserve Bank of Philadelphia or the Federal Reserve System. The authors would like to thank Charles Mattioli for their helpful research assistance.


Cooper, E., Henderson, C. and Kish, A. (2019), "Corporate social responsibility and financial stability: evidence from the Troubled Asset Relief Program", Managerial Finance, Vol. 45 No. 8, pp. 1111-1128.



Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited

Related articles