Determinants of Corporate Social Responsibility Disclosure: The Case

of the Banking Sector in Vietnam

NGUYEN THI LIEN HUONG

Faculty of Finance and Banking

Thuongmai University

79 Ho Tung Mau st., Hanoi

VIETNAM

Faculty of Finance and Banking

Thuongmai University

79 Ho Tung Mau st., Hanoi

VIETNAM

Thuongmai University

79 Ho Tung Mau st., Hanoi

VIETNAM

Abstract: This study aims to investigate the factors that influence corporate social responsibility disclosure

(CSRD) in the banking sector in an emerging country. The quantitative model is estimated for a sample of

banks in Vietnam for the period from 2013 to 2019. To explain the determinants of CSRD in banking,

regression analysis using panel data was employed while taking bank size, bank age, financial performance,

state ownership, and regulation as independent variables, and CSRD as a dependent variable. The results

revealed that bank size, bank age, and regulation have positive impacts on CSRD, whereas state ownership has

a negative impact, and financial performance was found to be insignificant. This study enriches the knowledge

Received: April 27, 2021. Revised: December 2, 2021. Accepted: January 15, 2022. Published: January 16, 2022.

"public confidence" [1]. They are supposed to

contribute more to this phase than other economic

organization due to their market's uniqueness [2].

Given the above, the banking industry's adoption of

the corporate social responsibility (CSR) principle is

critical. Other sectors are reactive to CSR because

of external stakeholder scrutiny, whereas the

banking industry plays an indispensable role in a

country's economic development and participates in

constructive CSR practices [3]. Because banks rely

rank high on international CSR disclosure [5].

Banks rely heavily on their reputation to support

their lending activities with adequately reliable

sources, which in turn impact bank risk. As a result,

becoming involved in environmentally responsible

operations has been seen as a method for gaining

social legitimacy and enhancing the banking

industry's image.

Despite a growing interest in CSR, few studies

have examined the CSR activities of banks in a

different. Developing countries have a much weaker

relationship between investor responsibility and

employees, customers, and communities than do

developed countries [7]. Furthermore, stakeholders

in emerging markets may have less influence than in

developed markets. Considering these facts, this

study provides an exciting opportunity to deepen

our knowledge of CSR in an emerging market

context.

Over the past few years, Vietnam has been a

Implementation of the 2030 Agenda for Sustainable

Development. The topic of CSR has become a

significant concern for the Vietnamese Government

and Vietnamese companies. However, the

regulations, policies, practices, and disclosures on

CSR in Vietnam are still in the early stages. The

first step forward in CSR regulations in Vietnam is

marked by the introduction of the Law on Securities

2006, which was amended and supplemented in

2010, and Circular 15/2015/TT-BTC issued on

06/10/2015 by the Ministry of Finance, replacing

Vietnam stock market [8]. These have caused many

Vietnamese banks to declare CSR, but not

voluntarily.

To close this research gap, we used a sample of

28 of the 37 banks operating in Vietnam, and we

collected data from their annual reports to

investigate the current corporate social

responsibility disclosure (CSRD) situation and the

factors that impact the banking industry’s CSRD.

This study offers an interesting opportunity to

by testing the impacts of factors such as bank size,

bank age, financial performance, state ownership

and regulations in an emerging country, the study

adds to the literature and the understanding of

banks’ CSRD. In addition, there is a shortage of

studies that measure CSR through multiple

dimensions, especially in the banking sector.

Therefore, we introduce a way to calculate the

CSRD index by using data that is drawn from

quantitative, qualitative, and narrative information

likely to disclose CSR information. Therefore, the

statement of the first hypothesis is as follows:

H1: Bank size has a positive impact on CSRD.

provide CSR information to legitimize their

operations [21]. Hence, financial performance may

be an important factor for CSRD [22]. In addition, a

profitable company's board of directors may want to

expose more CSR strategies to the public to

establish a favourable image [23]. Considering the

negative side of CSR strategy, Ruhnke & Gabriel

supposed that profitable corporations are more

financially sustainable for costly CSR initiatives and

in assuring community CSRD statement reports

H3: There is a positive correlation between

financial performance and CSRD.

some published research finds a negative association

between the two factors. Using sample data for

Chinese listed firms, a study by Shahab (2018)

demonstrated that firms with a share of the state

tend to have a low level of CSRD [30]. This view is

supported by Alotaibi & Hussainey [31], who argue

that governmental ownership reduces the CSR index

of firms in Saudi Arabia.

However, in the context of Vietnam, state-owned

banks can be expected to be more politically

H4: There is a positive relationship between

state-owned banks and CSRD.

2.5 Regulations

indirect penalties, such as labelling programs or

rewards [33].

Mandatory CSRD regulation has evolved as a

critical instrument of government CSR policy in this

setting. Transparency is promoted by this sort of

policy, which decreases information gaps between

firms and stakeholders [34]. Because firms may

more readily evaluate themselves against rivals and

foster debate about best practices or industry

al. indicated that companies that are required to

practice information transparency adopt

significantly more CSRD [33].

In Vietnam, Circular 155/2015 from the Ministry

of Finance, which presents “Guidelines on

disclosure information on the stock market” is the

most important document for regulating CSR.

Therefore, this study anticipates a favourable

correlation between regulations and CSR reporting

before and after the time this document was issued.

H6: Listing status has a significant positive

association with CSRD.

In short, the proposed conceptual model for the

determinants of CSRD is depicted in Fig. 1.

Source: Author’s research

We chose 2013 as the starting point of the

research period, two years before the issuance of

governmental guidelines for social responsibility

information disclosure. The time range of the data

extends to 2019 to ensure appropriate time coverage

and to capture the changes in the CSR information

disclosure of banks before and after governmental

instruction. The research period is divided into two

stages: the stage before Circular 155/2015 from the

Ministry of Finance in Vietnam on “Guidelines on

3.2 Variables

In this study, the level of CSRD in Vietnamese

banks’ annual reports is a dependent variable. This

index is calculated based on the indicators of three

criteria groups, which were built with reference to

GRI (Global Reporting Initiative) standard

we are interested in information related to three

categories of disclosure, concretized into a set of 29

indicators: community involvement disclosure that

focuses on local community, including sponsorship

and participation in educational, cultural, and other

societal events (6 indicators); human resources

disclosure consisting of information about the well-

being of employees and benefits in the workplace

(16 indicators); environmental disclosure, with a

focus on banks' CSR efforts for environmental and

the researcher detects the absence or existence of

CSR information in relation to each indicator. Then,

if the sample annual report contains an indicator

included in the categories, it receives the value of 1,

or 0 otherwise. The numbers have no quantitative

relationship and cannot be used for algebraic

calculations. Their meaning indicates whether the

indicators are included in the annual report of the

banks. To assign values to each indicator, we

identified several important keywords associated

with each indicator for the information search. For

information search.

The CSRD represents the level of disclosure of

corporate social responsibility in Vietnamese banks.

It is calculated each year by the proportion of

disclosed indicators out of total 29 indicators in

three categories from the obtained data set, as

follows:

Where:

CSRD can be expressed as a decimal or as a

percentage. The value of CSRD is in the range [0,1].

indication (as presented in Appendix 1). ei = 1 if the

indication was published in the annual report of

banks, such as bank size, bank age, financial

performance, state ownership, listed bank or

unlisted bank, and regulation between 2013 and

2019. A specific description of each independent

variable in the regression model is presented in

Table 1.

disclosure of the Vietnamese banks (Table 1).

CSRDit is CSRD of bank i at time t;

and a variance that does not change.

The model was estimated by using the least

squares method and data was analysed on Stata

software.

between 2013 and 2019

Source: Author’s research

average level of information disclosure over the

2013 to approximately 60% in 2019. The level of

CSRD in 2015 was noticeably higher than the level

of the two previous years by approximately 5%.

This can be explained by the fact that at the end of

2014, there were issuances of several governmental

The correlations between the different variables

in our study are illustrated in Table 4. Except for the

strong correlation between LIST and REG (at

around 0.74), other explanatory variables were

found to have low correlation, with all correlation

values below 0.6. These results illustrate that there

was no multicollinearity problem in our case.

Regarding the correlation matrix, we noted that

CSR was positively correlated with all explanatory

Source: Author’s research

Table 5 also presents a positive impact of bank

age on CSR reporting. In addition, the figures from

Table 5 illustrate a significant positive association

The REG variable differentiates between banks

listed before and after 2015 to determine whether

the regulations relating to CSRD issued in 2014 and

2015 for the listed firms affect the way banks

publish their information. Therefore, the results

from Table 5 suggest that governmental regulations

raised the CSRD quality of banks in Vietnam.

Source: Author’s research

We can see that the model indicates the

problem, we use the weighted least-squares method.

The results of the fixed model are as follows (Table

7).

Source: Author’s research

4.3 Discussion

Based on the results, we present the following

discussions.

Firstly, regarding Table 2, it can be implied that

the level of CSRD of Vietnamese banks is

improving over time. In addition, the considerable

rise in 2015 indicates the positive impact of the

guidelines on stock market information disclosure in

agreement with legitimacy theory and the findings

of Mahadeo [15] that larger firms are required to

public higher quality CSRD due to stakeholder

demand to legitimize their activities, and that older

banks with longer experience in reporting may

disclose more CSR information [18].

Thirdly, there is a significant negative

association between state ownership and CSRD,

meaning that firms with a state share tend to

maintain a low level of CSRD. This result is an

exciting finding of the study, which is different from

Hypothesis 4 proposed above. However, this finding

that state-owned banks have a higher rank in

comparison with commercial banks in terms of bank

size or reputation, and they have greater

opportunities to receive government priority. For

that reason, they do not have incentives to disclose

CSR information, which is considered a costly and

time-consuming process.

Fourthly, contrary to earlier findings [20, 24],

there is no evidence of a statistical association

between financial performance and CSRD. One

Finally, regulation shows a significant impact on

CSRD index. Only when the stock market applies

regulations on CSRD do banks increase their CSR

information disclosure. An implication of this

finding is that voluntary disclosure in developing

nations may not be sufficient to ensure the quality of

information disclosure. Therefore, it is necessary for

governmental authorities to issue additional

regulations relating to environmental and social

activities.

This research provided insight into how emerging

nations, particularly Vietnam, handle CSRD in the

banking industry. It makes four significant additions

to the literature on corporate transparency. First, by

investigating the effects of bank size, bank age,

Therefore, we employed the CSRD index, which is

based on quantitative, qualitative, and narrative data

from yearly sustainability reports and covers a wide

range of CSR topics: community, environment, and

job opportunities. We also adjusted the CSR criteria

to suit the Vietnamese context. Third, bank size,

bank age and regulation are the most effective

instruments for increasing CSRD in emerging

countries. Therefore, investors, policymakers, and

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