Corporate social responsibility disclosure and profitability in GCC banks from a stakeholder perspective

This study aims to explore the impact of corporate social responsibility (CSR) on the financial performance of GCC banking sector using the stakeholder approach. Data was collected from the annual reports of 24 banks in the GCC region from year 2015 to 2023. CSR metrics were derived from the social index developed by Kinder, Lydenberg, Domini Research and Analysis (KLD), considered among the most comprehensive publicly available CSR measures. The panel data regression technique was applied to investigate the relationship among the model variables. For model estimation, we selected random effect model based on the Hausman test result. The empirical results reveal that Environmental CSR has a positive and statistically significant impact on ROE, while firm size negatively affects ROE. Economic CSR shows a marginally significant but negative relationship. Social CSR does not exhibit a significant effect on ROE. The results underscore the relevance of CSR dimensions in predicting financial outcomes. The study is limited to GCC banks and spans a relatively short period (2015–2023), potentially constraining the generalizability of its findings to other sectors or region. Empirical findings highlight the importance of CSR, particularly environmental sustainability, in enhancing financial performance. The analysis provides a framework for GCC banks to align CSR policies with profitability goals./By focusing on the GCC banking sector, this study addresses a gap in existing literature and contributes to the understanding of CSR’s role in financial performance in a relatively underexplored region.