THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY ON FINANCIAL PERFORMANCE IN PAKISTAN'S INVESTMENT SECTOR

Abstract

Corporate social responsibility (CSR) practices, or sustainable finance, are becoming an integral element of company strategy and day-to-day operations in the fast-paced, globalized world of today. Despite its widespread appeal in academia, business, and politics, there is still some ambiguity about the relationship between CSR and financial performance (FP), particularly in developing nations. This research aims to investigate the impact of CSR practices, or sustainable finance, on the financial performance of Pakistani investment banks,  investment corporations, and securities companies (investment banks, investment companies, and securities companies) that are listed on the Pakistan Stock Exchange (PSX). Secondary data for the study was obtained from the 2013–2022 annual reports of 21 listed investment banks, investment companies, and securities companies. The data analysis is done using the panel data regression model with fixed effects with the aid of E-Views 9. While FP is monitored using Return on Equity (ROE) and Return on Asset (ROA), CSR is measured using content analysis. The results of the empirical study show that CSR has a favorable and considerable impact on financial performance, as measured by both of its metrics, ROA and ROE. The results contribute to the body of literature by offering a deeper comprehension of the CSR activities of Pakistani investment banks, investment companies, and  securities firms. Additionally, the study suggests that investment banks, investment companies, and securities companies listed on the PSX concentrate more on applying and implementing sustainable finance, or CSR practices, and disclosing this information in their annual reports.