A STUDY ON THE BANKING SECTOR IN INDONESIA: HOW DOES CORPORATE SOCIAL RESPONSIBILITY AFFECT FINANCIAL PERFORMANCE IN THE BANKING SECTOR IN INDONESIA.

• Main Author: Fadhil, Muhammad
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/87498
• Institution: Institut Teknologi Bandung

This study examines the impact of Corporate Social Responsibility (CSR) expenditure on the financial performance of Indonesian banks, focusing on both conventional and state-owned institutions. As CSR gains prominence in emerging economies like Indonesia, its effects on financial performance justify close examination. Using data from five leading banks over ten years, this quantitative analysis investigates key financial metrics: Return on Assets (ROA), Return on Equity (ROE), and Net Interest Margin (NIM). Financial data were sourced from Orbis, while CSR expenses were obtained from sustainability reports. The findings reveal a significant positive relationship between CSR expenditure and NIM, indicating that CSR enhances profitability through strengthened customer relationships and reputational gains. However, no statistically significant impact was observed on ROA or ROE, suggesting that CSR’s financial benefits may show through non-financial channels or over a longer period. Additionally, state-owned banks consistently exhibited a negative relationship with financial performance across all metrics, showing potential operational inefficiencies and structural challenges such as regulatory obligations. This study underscores the strategic role of CSR in fostering financial stability, customer trust, and reputational capital, even when direct short-term profitability gains are limited. It calls for state-owned banks to address inefficiencies and align CSR initiatives with measurable outcomes. Future research should extend the timeframe and use standardized metrics to better capture long-term CSR effects, particularly in the context of ownership structures. By integrating CSR into core strategies, banks can support sustainable development while maintaining