(An Autonomous Apex Institute Established by RBI & Banks)
(An Autonomous Apex Institute Established by RBI & Banks)
The study intends to examine the nexus between a bank’s corporate social responsibility practices and its contribution to systemic risk in the Indian context. Utilising data spanning from 2012–13 to 2021–22 for 27 Indian scheduled commercial banks, this study resorts to the two-step system GMM technique to investigate the nexus. The findings indicate a negative relationship between the two, both in the short and long term, with the long-term impact being greater in magnitude than in the short-term. This negative relationship finds its basis in the risk mitigation view, which is underpinned by both moral capital theory and stakeholder theory. Under this perspective, a bank’s CSR practices have an insurance-like effect, which helps reduce its systemic risk contribution.