The influence of corporate social responsibility and corporate governance on banking financial performance

Abstract

Purpose: This study aims to analyze the influence of corporate governance, corporate social responsibility on the financial performance of the banking sector as it is listed in the Indonesian Stock Exchange. Design/Methodology/Approach: This explanatory research uses secondary data in the form of Annual Corporate Financial Reports. Sample was selected by census techniques with a length of observation of 5 years from 2012 to 2016. The data analysis technique uses multiple regression models. Findings: The results of the study show that corporate social responsibility does not have any significant effect on financial performance as measured by the Return on Assets (ROA). Corporate governance does not have any significant effect on financial performance. Another finding is that social responsibility and governance have a positive direction with financial performance. Practical Implications: The good corporate governance and social responsibility will improve the banking's financial performance. The success of the company in improving its financial performance is inseparable from the application of good corporate governance. Originality/Value: The study implies a recommendation for the banking sector in Indonesia which is needed to improve the corporate governance and then the financial performance. Banking sector companies must pay attention and increase social responsibility because it can improve the company's financial performance.