Manh Ha Tran

Corporate social responsibility (CSR) is quite a new concept to business and society in Vietnam. Information on CSR reflects a firm’s commitment to ethical behavior in its activities and reputation. However, it is questioned whether the information disclosure has any relationship with firm performance. Employing panel regression of about 200 listed firms on the Vietnam Stock Exchange and space-based measurement of CSR disclosure, the study confirms a positive impact of CSR disclosure on firm performance. Firms use CSR disclosures to indirectly improve their performance. Firms that disclose CSR with greater degree of information experience higher marginal profitability. This finding supports stakeholder theory, legitimacy theory, and signaling theory in using CSR disclosure as a tool to improve firms’ reputation and transparency, maintain long-term operation, and hence improve financial performance. During the COVID-19 pandemic, firms that engage more in CSR will suffer less from the pandemic than firms that do not. Thus, the study implies a promising CSR picture for corporations in Vietnam. Investors, policy makers and any related authorities can utilize these findings to get more insight into the business through CSR disclosures.

The implementation of corporate social responsibility (CSR) has evolved significantly in recent years, shifting from philanthropic objectives to strategic integration in Vietnam. The Government has determined the transition toward a green economy, highlighting the role of the banking industry in promoting green credit. However, adopting CSR requires a comprehensive understanding of its impact and whether it is merely a compliance cost or a strategic tool for enhancing financial stability. This study, therefore, examines the impact of CSR on the financial stability of listed commercial banks in Vietnam. Using an aggregate CSR index and its two specific dimensions, environmental and social, constructed through content analysis, the study evaluates their impact on the financial stability measured by the Z-score index. Ordinary least squares, fixed and random effect regression, feasible general least squares regression, and system generalized method of moments are applied to the sample of 19 banks over the period from 2013 to 2022. The findings demonstrate a positive relationship between social and environmental initiatives and financial stability, with the environmental pillar showing a particularly strong effect. Specifically, a 1 percent increase in CSR and environmental indices results in increases of 2.361 and 1.327 units in the Z-score, respectively. Eco-friendly practices in banking enhance financial stability, while the social dimension shows a more nuanced impact. The findings of this study provide implications for bank managers and government authorities in developing and promoting CSR practices.

Acknowledgment
The authors gratefully acknowledge the financial support from the Banking Academy of Vietnam.