<abstract xmlns="http://www.w3.org/1999/xhtml"><p>The paper examines the power of corporate social responsibility to reduce information asymmetry and to act as a marketing instrument in the banking sector. Trust is the most important asset of a bank. Therefore, banks are motivated to use the most effective instruments to diminish information asymmetry with their stakeholders. The fact that cash disbursements in CSR actions are not directed towards shareholders makes them more valuable signals to other stakeholders regarding the financial soundness of the bank. The empirical study conducted based on limited dependent variable models supports the effectiveness of the CSR as marketing instrument in banking. It reveals the circumstances associated to a higher probability of an active CSR policy conducted by a banking institution. The results support the hypothesis that in the banking sector CSR is perceived as an instrument which helps stakeholders reduce information asymmetry. As marketing instrument, CSR contributes to increasing the tangibility of the banking products, decreasing their perceived variability and thus making them more attractive for the clients and allowing for differentiation between competitors.</p></abstract>

The paper examines the power of corporate social responsibility to reduce information asymmetry and to act as a marketing instrument in the banking sector. Trust is the most important asset of a bank. Therefore, banks are motivated to use the most effective instruments to diminish information asymmetry with their stakeholders. The fact that cash disbursements in CSR actions are not directed towards shareholders makes them more valuable signals to other stakeholders regarding the financial soundness of the bank. The empirical study conducted based on limited dependent variable models supports the effectiveness of the CSR as marketing instrument in banking. It reveals the circumstances associated to a higher probability of an active CSR policy conducted by a banking institution. The results support the hypothesis that in the banking sector CSR is perceived as an instrument which helps stakeholders reduce information asymmetry. As marketing instrument, CSR contributes to increasing the tangibility of the banking products, decreasing their perceived variability and thus making them more attractive for the clients and allowing for differentiation between competitors.

Using CSR to mitigate information asymmetry in the banking sector

The Bucharest University of Economic Studies, Bucharest, Romania

Management & Marketing

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

{"article-title":"Using CSR to mitigate information asymmetry in the banking sector"}

The paper examines the power of corporate social responsibility to reduce information asymmetry and to act as a marketing instrument in the banking sector....

Using CSR to mitigate information asymmetry in the banking sector

Published Online: Mar 19, 2016

Page range: 316 - 329

DOI: https://doi.org/10.1515/mmcks-2015-0021

Keywords
corporate social responsibility, banking, information asymmetry, marketing instrument

© 2015 Andreea Semenescu et al., published by De Gruyter Open

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Using CSR to mitigate information asymmetry in the banking sector

Published Online: Mar 19, 2016

Page range: 316 - 329

DOI: https://doi.org/10.1515/mmcks-2015-0021

Keywordscorporate social responsibility, banking, information asymmetry, marketing instrument

© 2015 Andreea Semenescu et al., published by De Gruyter Open

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Keywords
corporate social responsibility, banking, information asymmetry, marketing instrument