Paper short abstract:

In modern banks, implementing sustainable Corporate Social Responsibility(CSR) is essential in order to increase banks of surplus and soundness. This study is to evaluate the effects of CSR on the increase in banks soundness for Japanese banks.

Paper long abstract:

In modern banks, implementing sustainable Corporate Social Responsibility (CSR) is essential in order to increase banks` surplus and soundness. If banks provide high-quality financial services in the best interests of their customers(Depositors), it enhances the productivity of the corporate sector and contributes to steady asset accumulation in the private sector, and the resultant stronger customer base will ensure a stable revenue flow. A perception gap exists between Japanese banks and their customers in terms of banks' lending practices. From the banks' point of view, customers they are willing to finance are scarce, and thus competition through rate discounts becomes fierce; from the customer's point of view, banks won't lend to them without some kind of collateral or guarantee.

The first aim of this study is to evaluate the effects of CSR on the increase in banks soundness for Japanese banks. This empirical analysis is based on a survey on trust and reputation of Japanese banks in relation to CSR.

The second aim of this study is to examine the efficacy of the "Business Model for Creating Shared Value (CSV)," also known as the "Business Model for Japanese Financial Institutions," in increasing corporate value and banks soundness. The Business Model for CSV, officially announced by the Japanese Financial Services Agency (JFSA), is a customer-oriented asset management and intermediation model. At that time, JFSA encouraged banks to voluntarily disclose their initiatives to create customer-oriented business policies. Accordingly, this study will examine the effectiveness of CSV between banks and their customers.

This research revealed a common perception that the expense of CSR is simply one of the costs of doing business as a banks. However, in the changing relationship between CSR and society, I can also think of it as banks beginning to consider CSR as part of their branding strategy. To establish the sustainability of CSR, I will demonstrate the capitalization of brand value for banks through banks` surplus analysis in a two-stage economic model.

※This study is based on Japanese banks date in March 2020.