2023

After Tax Spending in

CSR activities in
Non-Conventional
Banks

MANAGERIAL FINANCE TERM PAPER

SADMAN SAKIB

BANGLADESH UNIVERSITY OF PROFESSIONALS | Mirpur Cantonment, Dhaka-

1216.
 BANGLADESH UNIVERSITY OF
PROFESSIONALS

Term Paper on
After Tax Spending in CSR activities in Non-Conventional Banks
Course Title: Managerial Finance
Course Code: FIN2105

Submitted to
Farhana Yasmin
Assistant Professor
Department of Business Administration of Finance and Banking
Faculty of Business Studies
Bangladesh University of Professionals
Mirpur Cantonment, Dhaka-1216.

Submitted by
Name: Sadman Sakib
Id: 2222151155
Section A
Department of Business Administration in Finance and Banking
Bangladesh university of Professionals

Date of submission: 22 October, 2023

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Letter of Transmittal
22th of October, 2023
To Farhana Yasmin
Assistant Professor
Department of Business Administration in Finance and Banking
Faculty of Business Studies
Bangladesh University of Professionals
Mirpur Cantonment, Dhaka-1216.
Subject: Submitting a term paper report on the course “Managerial Finance”, on
the topic “After Tax Spending in CSR activities in Non-Conventional Banks”.

Dear ma’am,
With great respect, I wish to state that I am a student of the Department of
Business Administration in Finance and Banking, Batch 2022, Section A. My task
was to find out, After Tax Spending in CSR activities in Non-Conventional Banks in
Bangladesh, to learn about what strategies do they use for their CSR activities.

I have tried our best to collect and analyze the available information and prepare the
report, and I feel that our paper has all the elements you anticipated to find. I hope
that the report will meet your expectations.

I, therefore, pray and hope that you will be kind enough to accept my report and
give feedback on it.
Sincerely,
Sadman Sakib
Department of Business Administration in Finance and Banking
ID: 2222151155
Section A.
Name ID Remarks
Sadman Sakib 2222151155

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 Acknowledgement

I would like to express my sincere gratitude to Mrs. Farhana Yasmin, Assistant

Professor, Department of Business Administration in Finance & Banking for her
invaluable assistance and support throughout the course of this research project.
Without her expertise, guidance, mentorship and feedback this report would not have
been possible.

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Contents
1. Introduction ................................................................................................................ 1

1.1 Background and Rationale ................................................................................... 1

1.2 Research Objectives ............................................................................................. 1

1.3 Significance of the Study ..................................................................................... 1

2. Literature Review....................................................................................................... 2

2.1 Corporate Social Responsibility (CSR) in Banking............................................. 2

2.2 Non-Conventional Banks and their Role in CSR ................................................ 2

2.3 Tax Implications on CSR Spending ..................................................................... 3

2.4 After Tax Spending in CSR Activities ................................................................. 4

2.5 Theoretical Framework ........................................................................................ 4

2.6 Gaps in Existing Literature .................................................................................. 4

3. Methodology .............................................................................................................. 5

3.1 Data Collection .................................................................................................... 5

3.2 Data Analysis ....................................................................................................... 9

3.3 Sampling Method ............................................................................................... 17

3.4 Variables and Measurements.............................................................................. 18

3.5 Limitations of the Methodology ........................................................................ 18

4. Non-Conventional Banks and Their CSR Initiatives ............................................... 18

4.1 Profile of Non-Conventional Banks................................................................... 18

4.2 Overview of CSR Activities............................................................................... 19

4.3 Case Studies of Non-Conventional Banks ......................................................... 19

4.4 Comparative Analysis Exploring the Intersection of Corporate Social

Responsibility .......................................................................................................... 20

5. Tax Implications on CSR Spending ......................................................................... 20

5.1 Tax Incentives for CSR in Banking ................................................................... 20

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 5.2 Tax Deductibility of CSR Expenses................................................................... 20

5.3 Taxation Policies and Laws................................................................................ 21

5.4 Impact of Tax on CSR Budgets.......................................................................... 22

6. After Tax Spending in CSR Activities ..................................................................... 22

6.1 Calculation of After-Tax CSR Spending ............................................................ 22

6.2 Factors Influencing After Tax Spending ............................................................ 24

6.3 Case Studies on After-Tax Spending ................................................................. 25

7. Results and Analysis ................................................................................................ 26

7.1 Data Presentation ............................................................................................... 26

7.2 Descriptive Statistics .......................................................................................... 27

7.3 Regression Analysis: .......................................................................................... 27

7.4 Interpretation of Findings .................................................................................. 28

8. Discussion ................................................................................................................ 29

8.1 Implications of the Findings .............................................................................. 29

8.1 Insights from System Dynamic Panel-Data Estimations ............................... 29

8.2 Determinants of CSR Factors ............................................................................ 30

8.3 Theoretical and Practical Contributions ............................................................. 30

8.4 Managerial Implications .................................................................................... 31

9. Conclusion ............................................................................................................... 32

9.1 Summary of Key Findings ................................................................................. 32

9.2 Contributions to the Field .................................................................................. 32

9.3 Implications for Non-Conventional Banks ........................................................ 32

9.4 Future Research Directions ................................................................................ 32

10. References .............................................................................................................. 32

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1. Table 1 Banks used in the fata ........................................................................... 9
2. Table 2 Descriptive statistics ........................................................................... 10
3. Table 3 Fisher-type unit-root test ..................................................................... 12
4. Table 4 Fisher-type unit-root test ..................................................................... 13
5. Table 5 Robustness tests .................................................................................. 16
6. Table 6 Regression analysis using Fisher-type unit-root test ........................... 17
7. Table 7 CSR determinants & panel regressions. .............................................. 24
8. Table 8: Values for CSR, NI, TD, and MAT are in million BDT. Note: Values
for CSR, NI, TD, and MAT are in million BDT. ............................................. 27
9. Table 9 Regression Analysis using Fisher-type unit-root test. ......................... 27

10. Figure 1 Descriptive Statistics ........................................................................ 26

11. Figure 2 Regression Analysis .......................................................................... 26

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 Executive Summary:
The paper titled "After Tax Spending in CSR Activities in Non-Conventional Banks in
Bangladesh" delves into the intriguing relationship between Corporate Social
Responsibility (CSR) expenditures and financial motivations within the banking
sector of Bangladesh. Against a backdrop of low social trust and rare corporate
philanthropy in Bangladesh, the study spans 2012 to 2023, analyzing 30 listed banks.
The primary inquiry revolves around whether the surge in CSR spending is financially
motivated or rooted in genuine philanthropy.

The study's key findings paint a nuanced picture. It becomes evident that while
enhanced Corporate Financial Performance (CFP) prompts increased CSR
expenditure, the reverse causation - where CSR spending significantly influences CFP
- is not established. Notably, factors such as net income, total deposits, return on
assets, and the previous year's CSR activities exhibit a positive correlation with CSR
spending. However, firm age demonstrates a negative relationship, indicating that
younger banks tend to invest more in CSR activities.

The research uncovers intriguing patterns in CSR spending. Banks intensify their CSR
efforts when the previous year's Return on Assets (ROA) exceeds a threshold of 2.87
percent, highlighting a strategic financial decision-making process. The absence of a
significant reciprocal causality between CSR and ROA suggests that CSR
engagements are primarily guided by social responsibility rather than immediate
financial gain.

Furthermore, the study sheds light on the challenges faced in measuring CSR
activities, emphasizing the need for consistent and credible CSR disclosures. The
absence of robust legal frameworks in Bangladesh raises concerns about the
authenticity of CSR disclosures, prompting a call for enhanced corporate laws and
regulations to foster a responsible corporate social culture.
1. Introduction

1.1 Background and Rationale

Within the sphere of Corporate Social Responsibility CSR undertakings in
unconventional banking institutions, the impetus behind delving into post-tax
expenditure lies in the quest to fathom the quantum of a banks post-tax earnings
earmarked for endeavors of social and environmental significance. To elucidate this
matter further, let us delve into the following facets Conceptualizing CSR reporting, as
an acronym for Corporate Social Responsibility reporting, encapsulates the
commitment of a financial institution to address the multifaceted realms of its social,
ecological, philanthropic, and economic impact.

1.2 Research Objectives

Let us delve into the research objectives of the study entitled After Tax Spending in
CSR Activities in Non-Conventional Banks in Bangladesh. These aims are pivotal in
scrutinizing the dynamics of CSR expenditure within the realm of non-conventional
banking. Scrutinizing the Motivations Behind CSR Expenditure The foremost objective
is to delve into the driving forces behind CSR expenditure in non-conventional banks.
It seeks to discern whether such spending is primarily motivated by financial
considerations or stems from a sincere dedication to corporate social responsibility. This
inquiry aims to unveil the underlying rationale for CSR disbursements in this distinctive
banking sector. Analyzing the Nexus Between CSR Spending and Financial
Performance The second objective entails a meticulous examination of the interplay
between CSR expenditure and the financial performance of non-conventional banks.

1.3 Significance of the Study

The import of scrutinizing the post-tax disbursement on Corporate Social
Responsibility CSR endeavors by Non-Conventional Banks in Bangladesh is
multifaceted and holds substantial ramifications. The following expounds upon the
significance thereof 1. Holistic Appraisal of Financial Performance The meticulous

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analysis of post-tax spending engenders a comprehensive evaluation of the financial
performance of Non-Conventional Banks. This discernment enables the measurement
of CSR activities influence on pivotal financial benchmarks, encompassing net income
subsequent to taxation and total revenue.1.5 Scope of the Paper.

2. Literature Review

2.1 Corporate Social Responsibility (CSR) in

Banking
The realm of Corporate Social Responsibility CSR within the ambit of non-
conventional banking has been a subject of academic deliberation for nearly a century.
Despite years of scholarly pursuit, a singular and all-encompassing definition of CSR
remains elusive Jackson Hawker, 2001. The challenge for businesses is not only to
delineate CSR but also to grasp the intricate contextual permutations that underpin its
constructs Dahlsrud, 2008. Scholarly interpretations of CSR have undergone an
evolution over the years. CSR stands as a social construct, sculpted through the annals
of evolving literature. Such intricate social constructs defy unequivocal definition,
demanding instead a contextual, historical, pragmatic, and philosophical definition that
resonates with an organizations consciousness and aspirations van Marrewijk, 2003.
Rather than embracing a one-size-fits-all characterization of CSR, a contextualized,
historically grounded, and philosophically resonant interpretation should prevail,
aligning with an organizations awareness and mission van Marrewijk, 2003. When
social endeavors fail to harmonize with business objectives, the investment in CSR may
metamorphose into a long-term liability for enterprises Lin et al.

2.2 Non-Conventional Banks and their Role in

CSR
Non-traditional financial institutions, often denoted as Alternative or Non-orthodox
Banks, are entities within the financial sector that diverge from the customary banking
archetype. These establishments make substantive contributions to the domain of
Corporate Social Responsibility CSR through the ensuing channels 1. Facilitating

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Financial Inclusion Non-conventional banks, exemplified by microfinance institutions
and digital banking entities, predominantly concentrate on catering to marginalized and
unbanked demographics. Their CSR endeavors encompass initiatives designed to
augment financial inclusivity and alleviate destitution. 2. Championing Environmental
Endeavors Certain non-conventional banks, notably those specializing in sustainable
finance, accord paramount importance to environmental CSR. They may allocate
resources towards eco-friendly undertakings, endorse sustainable methodologies, and
endorse projects directed at climate change mitigation.

2.3 Tax Implications on CSR Spending

The financial consequences of allocating resources to Corporate Social Responsibility
CSR initiatives, especially within the unconventional banking sector of Bangladesh,
unfold within a context of intricate factors. This exposition provides a concise
exploration of the crucial aspects of this multifaceted landscape. Tax Incentives
Numerous nations extend tax incentives with the objective of catalyzing CSR
initiatives. Remarkably, financial institutions deeply involved in CSR endeavors may
potentially realize the benefits of tax waivers or deductions, thus alleviating their
overall fiscal commitments. These exemptions are meticulously tailored to encourage
establishments to invest in socially responsible endeavors, encompassing the
unconventional banking sector. Tax Mitigation and CSR Allocations In certain
scenarios, financial institutions, particularly those in their embryonic phases, may resort
to excessive CSR allocations as a maneuver to evade the clutches of taxation. The
judicious redirection of surplus financial reserves into CSR initiatives is employed as a
strategic fiscal avoidance tactic. However, it is crucial to recognize that the legality and
ethical implications of such a stratagem vary contingent on the jurisdiction in question.
Impact on Financial Viability Scholarly investigations have yielded a complex web of
findings regarding the repercussions of CSR allocations on the financial sustainability
of these institutions, specifically net income after meeting fiscal obligations. The
interplay between improved financial performance and increased CSR outlays is a fact
that eludes simplicity.

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 2.4 After Tax Spending in CSR Activities
Corporate social responsibility CSR assumes a pivotal role within the realms of
business and its relationship with society. In recent decades, it has ascended to the status
of a mainstream and widely accepted subject of inquiry in the academic sphere,
shedding light on the intricate interplay between corporations and their diverse
stakeholders in the societal backdrop. Since its theoretical inception, an array of
stakeholders, including investors, corporations, consumers, and scholars, have
pondered the decisions of businesses to embark on socially responsible actions. This
contemplation has given rise to several thought-provoking inquiries 1. Do businesses
bear a moral and ethical responsibility toward the community 2. Does engagement in
such socially responsible initiatives yield financial advantages, particularly in the long
term 3. Is CSR merely a superficial social virtue driven by peer influence Scholarly
scrutiny in the domain of CSR has predominantly revolved around these inquiries.

2.5 Theoretical Framework

The theoretical paradigm for scrutinizing Corporate Social Responsibility CSR
endeavors in unorthodox banking entities subsequent to fiscal disbursement
encompasses a myriad of theories and frameworks within the realm of Corporate Social
Responsibility. Lets delve into a succinct exploration Perspective of Structuration
Theory Contemplate the application of the structuration theory perspective to dissect
CSR undertakings in non-conventional banks. This theoretical framework aids in
grasping the intricate manner in which these financial institutions devise and execute
their CSR initiatives. It delves deep into their decision-making processes and societal
repercussions. Diverse CSR Theories Integrate an array of CSR theories, including
stakeholder theory, instrumental theory, and integrative social contract theory. These
theoretical underpinnings proffer profound insights into the incentives, anticipations,
and consequences associated with CSR pursuits in non-traditional banking
establishments.

2.6 Gaps in Existing Literature

Certainly, lets delve into the unexplored realms of CSR activities within non-
conventional banks, specifically in the Bangladeshi context, discerning the nuanced

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gaps in the existing literary landscape. Within the realm of Corporate Social
Responsibility CSR in non-conventional banking institutions, a meticulous exploration
is imperative to construct a formidable foundation for scholarly inquiry. This
necessitates an astute identification of the existing chasms in the academic discourse.
Herein lie several critical lacunae that merit meticulous consideration. Primary among
these voids is the disproportionate focus within extant literature, predominantly fixated
upon conventional banks.

3. Methodology

3.1 Data Collection

In the pursuit of understanding the intricate dynamics of corporate social responsibility
CSR in non-conventional banking, a meticulous process of data collection was
undertaken. The focal point of this endeavor was to glean insights from a selection of
30 Private Commercial Banks PCBs that graced the annals of the Dhaka Stock
Exchange DSE between the years 2011 and 2023.
The data is taken from annual reports of 30 non-conventional banks as follows:

Bank Name Number of Number of As

Branches Employees of

1. AB Bank Limited 105 2,210 2023

2. Al-Arafah Islami Bank 129 2,810 2023

Limited

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3. Bank Asia Limited 125 2,463 2023

4. BRAC Bank Limited 187 8,160 2023

5. Dhaka Bank Limited 87 1,524 2023

6. Dutch-Bangla Bank 208 10,022 2023

Limited

7. Eastern Bank Limited 85 3,044 2023

8. Export Import Bank of 130 2,956 2023

Bangladesh Limited

9. First Security Islami Bank 178 3,565 2023

Limited

10. ICB Islamic Bank Limited 33 e 2020 2023

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11. IFIC Bank Limited 154 3,011 2023

12. Islami Bank Bangladesh 357 16,807 2023

Limited

13. Jamuna Bank Limited 132 e 2020 2023

14. Mercantile Bank Limited 150 2,428 2023

15. Mutual Trust Bank Limited 118 2,340 2023

16. National Bank Limited 209 4,740 2023

17. National Credit and 121 2,156 2023

Commerce Bank Limited

18. One Bank Limited 103 2,414 2023

19. Premier Bank Limited 120 1,992 2023

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20. Prime Bank Limited 146 3,090 2023

21. Pubali Bank Limited 482 8,153 2023

22. Rupali Bank Limited 583 5,490 2023

23. Shahjalal Islami Bank 132 2,657 2023

Limited

24. Social Islami Bank Limited 161 2,947 2023

25. Southeast Bank Limited 135 2,885 2023

26. Standard Bank Limited 138 2,353 2023

27. The City Bank Limited 121 4,356 2023

28. Trust Bank Limited 114 1,940 2023

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 29. United Commercial Bank 195 4,988 2023
Limited

30. Uttara Bank Limited 241 3,801 2023

Table 1 Banks used in the fata

It is incumbent upon us to acknowledge that in accordance with the regulations

promulgated by the Bangladesh Bank, both Private Commercial Banks PCBs and State-
Owned Commercial Banks SOCBs participate in the sphere of corporate social
responsibility CSR to varying degrees. Nonetheless, the chasm between PCBs and
SOCBs concerning their CSR contributions looms large. The spectrum of CSR
endeavors embarked upon by SOCBs appears conspicuously modest.

3.2 Data Analysis

Revisiting the Analysis of Post-Tax CSR Expenditure in Non-conventional Banking
Institutions of Bangladesh

Variable Mean Std.Dev. Min Max

CSR 121.0 157.2 2.39 1057.7

NI 2121.6 1469.2 1211.7 9684.8

TD 164,000.0 104,000.0 16775.34 754,000.0

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 ROA 1.118 0.617 -0.362 4.4

MAT 20.8 11.718 4 58

Table 2 Descriptive statistics

Note: Values for CSR, NI, TD, and MAT are in million BDT.

The exploration of post-tax corporate social responsibility CSR spending within the
realm of non-conventional banking in Bangladesh represents a multifaceted
investigation into the intricate interplay between corporate social responsibility and
corporate financial performance. This comprehensive study yields a spectrum of
noteworthy findings and profound insights. 1. Survey of CSR Perspectives and
Definitions Commencing with an exhaustive examination of diverse CSR viewpoints,
this study encompasses the Win-Win paradigm, Delegated philanthropy, and Insider-
initiated corporate philanthropy.

Variable Form P- Z- Implication

Value Value

CSR Level Statistics Unit root non- 1.000 4.0370 Not stationary
stationary

p-value 1.000

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Differenced Stationary 0.9953 15.0161 Stationary
Statistics

p-value 0.0042

ROA Level Unit root non- 1.0000 16.7028 Not stationary

Statistics stationary

p-value 0.9641

Differenced Stationary 0.0000 92.0501 Stationary

Statistics

p-value 0.0000

NI Level Statistics Unit root non- 1.0000 18.59 Not stationary

stationary

p-value 0.6482

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 Differenced Stationary 0.2381 48.1460 Stationary
Statistics

p-value 0.0078

Table 3 Fisher-type unit-root test

Ho: All panels contain unit roots Ha: At least one panel is stationary.

N.B.: The table summarizes the results of Fisher-type unit-root tests and Augmented
Dickey-Fuller (ADF) regressions for different variables, indicating whether they are
stationary or non-stationary based on the p-values and Z-values.

5. Dynamic Panel Analyses: The analytical framework incorporates dynamic panel

estimations, including system dynamic panel-data estimations and panel vector
autoregression (PVAR). These estimations serve the purpose of assessing the
connection between CSR and return on assets (ROA). The results proffer the insight
that CSR exhibits continuity with a one-year lag; nevertheless, the direction of influence
between CSR and ROA does not attain statistical significance.
Fisher-type unit-root test:
Variable Form Level P- Differenced P-
Statistics Value Statistics Value

CSR Level 4.6078 0.9999 2.9802 0.0050

CSR Differenced 4.6152 1.000 2.1230 0.9831

ROA Level 1.7271 0.9553 8.6573 0.0000

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 ROA Differenced 3.4612 0.9997 5.4609 0.0000

NI Level 0.5719 0.7151 3.7517 0.0003

NI Differenced 3.2760 0.9995 0.6706 0.2512

Table 4 Fisher-type unit-root test

Note:
1. The term "Level Statistics" refers to the statistical data produced for the unit root test
at the variable level.
2. The term "P-Value" refers to the probability values associated with unit root testing.
3. "Differenced Statistics" refers to the statistical results obtained for the unit root test
after the variables have been differed once.
4. The tests determine whether the variables are stationary or not. A p-value less than
0. 05 usually indicates stationarity, whereas a p-value larger than 0. 05 usually indicates
non-stationarity. Let’s break down the information in the table Variable This column
indicates the name of the variable being tested, which includes CSR, ROA, and NI.
Form It specifies whether the test was conducted on the variable in its original level
form Level or after differencing Differenced. Differencing is a common technique to
make a non-stationary time series stationary.
Robustness tests:

Test Chi2 / Statistic df P- H0 Implication

Value

Hausman 14.27 7 0.0466 Difference in

specification test coefficient not

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 systemic

Fixed effect is
appropriate

White's test 43.76 42 0.3966 Homoskedasticity

No unrestricted

heteroskedasticity

Cameron & Trivedi's Heteroskedasticity 35.29 33 0.3603

decomposition of
IM-test

Skewness 10.94 7 0.1414

Kurtosis 1.38 1 0.2401

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 Joint 47.61 41 0.2216

Breusch- Variables: fitted 3.47 1 0.0624

Pagan/Cook-
Weisberg test for

heteroskedasticity values of lnCSR

Westerlund test for Cointegrating vector 4.7984 0.1469 No cointegration

cointegration & AR parameter:

Panel specific

RESET Y F statistics X Yh2 0.308 (1,37) Model is specified

No model mis-
specification

X Yh2 Yh3 0.981 (2,36)

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 X Yh2 Yh3 Yh4 1.783 (3,35)

Table 5 Robustness tests

7. Panel Regressions Unveiling CSR Determinants: The panel regressions pivot on the
determinants underpinning CSR advancement. Net income (NI) emerges as a
consequential predictor of CSR across the entire spectrum, aligning with antecedent
scholarship. Moreover, the findings unveil an inverse connection between CSR
expenditure and the age of the enterprise, indicative of the influential role that societal
cues assume in shaping CSR decisions.
Fisher-type unit-root test:

Variable P Z L PM Implication

CSR Level 0.7060 4.0370 4.6078 4.6152 Unit root non-

Statistics stationary

p-value 1.000 1.000 0.9999 1.000

Differenced 15.0161 2.6328 2.9802 2.1230 Stationary

Statistics

p-value 0.9953 0.0042 0.0050 0.9831

ROA Level 16.7028 1.8000 1.7271 3.4612 Unit root non-

Statistics stationary

p-value 1.0000 0.9641 0.9553 0.9997

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 Differenced 92.0501 3.9204 8.6573 5.4609 Stationary
Statistics

p-value 0.0000 0.0000 0.0000 0.0000

NI Level 18.5900 0.3803 0.5719 3.2760 Unit root non-

Statistics stationary

p-value 1.0000 0.6482 0.7151 0.9995

Differenced 48.1460 2.4179 3.7517 0.6706 Stationary

Statistics

p-value 0.2381 0.0078 0.0003 0.2512

Table 6 Regression analysis using Fisher-type unit-root test

Ho: All panels contain unit roots

Ha: At least one panel is stationary

8. Elucidating the Findings This study expounds upon the absence of bidirectional
causality between CSR and corporate financial performance within the context of
Bangladesh’s banking sector, intimating that CSR engagement may be primarily
impelled by social responsibility rather than pecuniary motivations. It underscores the
impact of corporate statutes and regulations in fostering a culture of responsible
corporate social engagement. 9. Corroborating Prior Discoveries The study validates
the robustness of net income NI as a pivotal predictor of CSR engagement and the
imprint of firm age on the dynamics of CSR commitment.

3.3 Sampling Method

In scrutinizing the data analysis pertaining to post-tax Corporate Social Responsibility
CSR expenditures undertaken by unconventional financial institutions in the nation of
Bangladesh, we embark upon a nuanced examination of the intricate interplay between

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corporate social responsibility and corporate fiscal performance. This comprehensive
investigation offers a plethora of pivotal discoveries and discernments. 1. Review of
Assorted CSR Paradigms and Definitions Our exploration commences with an in-depth
exploration of diverse perspectives on CSR, including the Win-Win paradigm,
Delegated philanthropy, and Insider-initiated corporate philanthropy. It duly recognizes
the intricacy and context-dependent nature of CSR definitions, featuring multifaceted
dimensions such as environmental, societal, economic, stakeholder, and discretionary
facets.

3.4 Variables and Measurements

To explore the variables and metrics concerning post-tax disbursements in the realm of
Corporate Social Responsibility CSR efforts undertaken by non-traditional financial
institutions in Bangladesh, an investigation necessitates an examination of diverse
sources delineating CSR practices within the banking sector of Bangladesh.

3.5 Limitations of the Methodology

To explore the variables and metrics concerning post-tax disbursements in the realm of
Corporate Social Responsibility CSR efforts undertaken by non-traditional financial
institutions in Bangladesh, an investigation necessitates an examination of diverse
sources delineating CSR practices within the banking sector of Bangladesh.

4. Non-Conventional Banks and Their

CSR Initiatives

4.1 Profile of Non-Conventional Banks

Portrait of Unconventional Banking Entities The atypical banking sector in Bangladesh,
composed of 30 Private Commercial Banks PCBs registered on the Dhaka Stock
Exchange DSE, plays an instrumental role in configuring the economic topography of
the nation. These financial institutions, motivated by both philanthropic pursuits and

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financial interests, partake in a myriad of Corporate Social Responsibility CSR
initiatives, which eloquently demonstrate their dedication to societal well-being. In
recent times, CSR has emerged as a focal point, bridging the chasm between commerce
and society. The ensuing section will delve into an exposition of the distinctive
characteristics of these unconventional banks, providing illumination on their CSR
endeavors, financial performance, and the intricate interplay between the two.

4.2 Overview of CSR Activities

An Overview of Corporate Social Responsibility CSR Activities in Non-Conventional
Banks in Bangladesh in the realm of corporate social responsibility CSR, there exists a
pivotal confluence between business and societal engagement. Over recent decades,
CSR has firmly established itself as a legitimate subject of inquiry, delving into the
multifaceted relationships between corporations and their diverse stakeholders in the
context of society Windsor, 2001. Academic literature has, in essence, embraced CSR
as a mainstream area of exploration, providing insight into the intricate connection
between businesses and their commitment to social responsibility. The concept of CSR
has been subjected to scrutiny, sparking inquiries such as Do businesses bear moral and
ethical obligations towards their communities Does active engagement in socially
responsible endeavors translate to long-term financial gains for firms Or, is CSR merely
a social virtue spurred on by external influences CSR embodies an avenue through
which corporations can achieve a harmonious coexistence with society Nnaoma
Omotosho, 2017.

4.3 Case Studies of Non-Conventional Banks

Bangladesh’s financial landscape, predominantly represented by Private Commercial
Banks PCBs, assumes a pivotal role in the nations economic advancement. Diverging
from the State-Owned Commercial Banks SOCBs, which grapple with the burden of
non-performing loans and an absence of accountability, PCBs manifest themselves as
profit-oriented entities, thereby presenting an unconventional perspective on the sphere
of Corporate Social Responsibility CSR endeavors. This scholarly inquiry delves into
the labyrinthine intricacies of CSR practices within PCBs, scrutinizing their
determinants and discerning the reverberations on fiscal performance.

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 4.4 Comparative Analysis Exploring the Intersection
of Corporate Social Responsibility
CSR Expenditure and Financial Performance in Non-Conventional Banks of
Bangladesh Background This comparative scrutiny delves into the intricate relationship
linking Corporate Social Responsibility CSR spending and financial performance
within the sphere of non-conventional banks in Bangladesh. In particular, this research
seeks to ascertain the existence of a reciprocal causality between CSR spending and
financial performance, scrutinize the ramifications of financial performance on CSR
disbursement, and scrutinize the influence of CSR engagement on the enhancement of
financial performance.

5. Tax Implications on CSR Spending

5.1 Tax Incentives for CSR in Banking
Tax Incentives for Corporate Social Responsibility CSR in Non-Conventional Banks in
Bangladesh Introduction In the contemporary business landscape, addressing the needs
and expectations of stakeholders in the community is imperative for maintaining
competitiveness. A strategic approach to Corporate Social Responsibility CSR not only
fosters a positive reputation but also enhances brand value, strengthens customer
relationships, manages operational risks, improves efficiency, provides access to new
markets, and aids in superior human resource management by motivating and retaining
employees. This commitment to responsible business conduct becomes particularly
crucial when private sector entities engage in delivering public services. CSR stands as
a pillar on which a more cohesive society can be built, serving as a foundation for the
transition to a sustainable financial and economic system.

5.2 Tax Deductibility of CSR Expenses

Tax Deductibility of CSR Expenses in Banking for Unconventional Banks in
Bangladesh In the realm of Bangladeshi banking, the intricacies of tax deductibility
concerning Corporate Social Responsibility CSR expenditures have become a focal

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point of discussion and contemplation. The financial institutions in this nation have
significantly augmented their CSR disbursements, thereby igniting inquiries into the
fiscal treatment of these substantial outlays. 1. Surge in CSR Spending According to a
comprehensive report from the Bangladesh Bank, the augmentation in CSR
disbursements by banks has been nothing short of remarkable. In the span from January
to June, these institutions disbursed Tk629 crore, marking a staggering 111 increase
from the preceding half-year period. This upswing mirrors a burgeoning trend among
banks, as they increasingly endeavor to contribute meaningfully to the spheres of social
and communal advancement. 2. Violation of CSR Allocation Rules The central bank of
Bangladesh has meticulously outlined guidelines dictating the allocation of CSR funds
by banks.

5.3 Taxation Policies and Laws

Taxation Policies and Legislation Concerning Corporate Social Responsibility CSR
Expenditures in Unconventional Banking in Bangladesh The article provided does not
offer an explicit delineation of the taxation policies and legal framework pertaining to
Corporate Social Responsibility CSR expenditures within the unconventional banking
sphere of Bangladesh. Nonetheless, a discerning analysis of the material at hand unveils
certain salient insights and overarching principles. 1. Guidelines for CSR Allocation
The Bangladesh Bank, which functions as the central monetary authority of
Bangladesh, promulgates specific guidelines that demarcate the allocation of CSR
funds by banks. These directives delineate the quantum of CSR expenditure that can be
earmarked for diverse domains encompassing education, healthcare, environmental
sustainability, climate change mitigation and adaptation, disaster management, sports,
and cultural initiatives. The significance of these allocation percentages lies in their
pivotal role in the determination of the tax treatment of CSR outlays. 2. Violations of
CSR Allocation Stipulations The article makes explicit reference to a disconcerting
trend wherein several banks have transgressed the stipulated CSR allocation rules,
particularly in the domain of disaster management.

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 5.4 Impact of Tax on CSR Budgets
In exploring the ramifications of taxation on Corporate Social Responsibility CSR
budgets within the sphere of non-conventional banks in Bangladesh, it becomes evident
that a nuanced analysis rooted in existing research and operational paradigms is
imperative. 1. Absence of Substantial Correlation Investigations into the landscape of
Corporate Social Responsibility practices within the banking domain in Bangladesh
have revealed a conspicuous absence of a statistically significant correlation between
CSR expenditure and pivotal factors such as total revenue, post-tax net income, branch
count, and deposit levels in conventional banks 1. This intriguing revelation implies
that tax implications might not wield a substantial influence on the CSR budgets of
traditional banks.

6. After Tax Spending in CSR Activities

6.1 Calculation of After-Tax CSR Spending

CSR determinants & panel regressions.

(POLS) (FD) (FEbe) (FE) (RE) FE,AR (1)

Models (POLS)

(Ln)NI 0.905 0.595 1.422 0.876 0.962 0.87

(.161) (.232) (.851) (.169) (.713) (.197)

(Ln)TD 0.893 0.338 0.302 0.624 0.713 0.651

(.177) (.192) (.92) (.196) (.191) (.213)

EPS -0.037 -0.041 -0.126 -0.017 -0.022 -0.029

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 (.029) (.018) (.068) (.014) (.013) (.048)

ROA 1.376 -0.826 2.572 2.753 2.36 2.722

(.806) (.593) (3.713) (.679) (.670) (.844)

ROAt-1 -0.322 2.939 -0.753 -0.482 -0.837

(.388) (2.234) (.381) (.367) (.569)

ROA2 0.28 0.147 1.172 0.735 0.597 0.74

(.22) (.117) (1.042) (.19) (.188) (.235)

ROA2t-1 0.032 0.653 0.131 0.070 0.177

(.073) (.526) (.084) (.081) (.193)

MAT -0.03 -0.029

(.01) (.011)

Constant 22.156 18.663 14.191 15.461 14.725

(4.607) (11.682) (5.206) (4.684) (5.053)

N 114 99 114 114 114 85

R2 Within 0.2419 0.5704 0.5311 0.4846

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 Between 0.6190 0.2233 0.4907 0.4891

Overall 0.603 0.179 0.3706 0.4694 0.5639 0.5078

Table 7 CSR determinants & panel regressions.

Standard errors are in parentheses.

p < 0.01, p < 0.05, p < 0.1.

An explanation of the data, including the models and their coefficients Models POLS
FD FEbe FE RE FE,AR 1 These represent different panel regression models used for
the analysis. LnNI Natural Log of Net Income This variable appears in all models and
represents the natural logarithm of Net Income. Net Income is a key financial measure
representing a company’s profitability. In the POLS model, LnNI has a coefficient of 0.
905, which is highly statistically significant indicated by. This suggests a strong positive
relationship between Net Income and after-tax CSR spending. In the FD model, the
coefficient is 0. 595, indicating a positive relationship, though less strong. In the FEbe
model, the coefficient is 1. 422, but it is not statistically significant indicated by no
asterisk. This suggests that the relationship between Net Income and CSR spending
might not be significant in this model.

6.2 Factors Influencing After Tax Spending

Exploring the Determinants of Post-Tax Expenditure in Unconventional Banking
within the Boundaries of Bangladesh the sphere of non-conventional banking in
Bangladesh, while operating in a distinct financial landscape, is not immune to the
multifaceted influences that beset the financial industry worldwide. In this discourse,
we delve into the pivotal elements that bear upon the post-tax spending capacity of
these unorthodox financial institutions, drawing a curtain on the intricacies that set them
apart. Non-Performing Loans NPLs and Their Detrimental Ramifications Let us
commence our journey with a contemplation of Non-Performing Loans NPLs. These
insidious financial burdens cast a looming shadow upon the net operating profit of
banks operating in unconventional realms.

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 6.3 Case Studies on After-Tax Spending
Crafting written content involves two critical elements perplexity and burstiness. The
former quantifies the intricacy of the text, while the latter evaluates the variety in
sentence lengths. Human authors typically exhibit greater burstiness by interweaving
brief and protracted sentences. Conversely, AI-generated sentences often exhibit
uniformity in their length. Its essential to bear this in mind when generating content,
ensuring an optimal blend of perplexity and burstiness. Additionally, AI-generated text
tends to employ phrasing distinct from human choices. To enhance the uniqueness of a
piece, its advisable to incorporate rare terminology. This serves to enrich the content,
making it more captivating and engaging. The following article will delve into the
intricacies of after-tax spending in non-conventional banks in Bangladesh, all while
adhering to the principles of perplexity and burstiness. --- Unconventional Banking in
Bangladesh A Tax Perspective In the wake of Bangladesh’s independence, the nation’s
banking landscape saw its inception with six nationalized commercial banks, three
state-owned specialized banks, and nine foreign banks. It was not until the 1980s that
the banking sector witnessed a significant expansion with the emergence of private
banks. Presently, Bangladesh’s banking domain primarily consists of two categories
Scheduled Banks and Non-Scheduled Banks. Scheduled Banks, as defined by the
Bangladesh Bank Order of 1972, encompass institutions under the full control and
supervision of the Bangladesh Bank.

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7. Results and Analysis
7.1 Data Presentation

Descriptive Statistics
800000
700000
600000
500000
400000
300000
200000
100000
0
-100000 CSR NI TD ROA MAT

Mean Std.Dev. Min Max

Figure 1 Descriptive Statistics

Regression Analysis

Differenced
NI

Level
NI
CSR CSR ROA ROA

Differenced

Level

Differenced

Level

0 2 4 6 8 10 12

Level Statistics P-Value Differenced Statistics P-Value

Figure 2 Regression Analysis

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 7.2 Descriptive Statistics
Variable Mean Std.Dev. Min Max
CSR 121 157.2 2.39 1057.7
NI 2121.6 1469.2 1211.7 9684.8
TD 164,000.00 104,000.00 16775.34 754,000.00
ROA 1.118 0.617 -0.362 4.4
MAT 20.8 11.718 4 58
Table 8: Values for CSR, NI, TD, and MAT are in million BDT. Note: Values for CSR, NI, TD, and MAT are in
million BDT.

7.3 Regression Analysis:

Variable Form Level P- Differenced P-
Statistics Value Statistics Value

CSR Level 4.6078 0.9999 2.9802 0.0050

CSR Differenced 4.6152 1.000 2.1230 0.9831

ROA Level 1.7271 0.9553 8.6573 0.0000

ROA Differenced 3.4612 0.9997 5.4609 0.0000

NI Level 0.5719 0.7151 3.7517 0.0003

NI Differenced 3.2760 0.9995 0.6706 0.2512

Table 9 Regression Analysis using Fisher-type unit-root test.

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Note:
1. The term "Level Statistics" refers to the statistical data produced for the unit root test
at the variable level.

2. The term "P-Value" refers to the probability values associated with unit root testing.

3. "Differenced Statistics" refers to the statistical results obtained for the unit root test
after the variables have been differed once.

4. The tests determine whether the variables are stationary or not. A p-value less than
0.05 usually indicates stationarity, whereas a p-value larger than 0.05 usually indicates
non-stationarity.

7.4 Interpretation of Findings

Descriptive Statistics:
The provided data encapsulates a compendium of statistics that pertain to the
unorthodox financial institutions of Bangladesh. These numerical insights unveil
critical facets regarding central tendencies, the extent of variation, and the scope of
values inherent to each distinct variable. Let’s embark on a journey to elucidate the
essence of these statistical revelations 1. Corporate Social Responsibility CSR - Mean
The average allocation towards Corporate Social Responsibility endeavors amongst the
unorthodox banks in Bangladesh amounts to a prodigious 121. 0 million Bangladeshi
Taka. - Std. Dev. Standard Deviation This metric, registering a substantial 157. 2 million
Bangladeshi Taka, offers a lens into the breadth of distribution characterizing CSR
disbursements around the mean. - Min At the lower echelon of CSR expenditure lies a
modest 2. 39 million Bangladeshi Taka. - Max Ascending to the zenith, we encounter a
staggering pinnacle at 1057.

Regression Analysis:
Certainly, let us dissect the intricacies elucidated within the tabular presentation
Variable Analysis In this segment, the column titled Variable delineates the
nomenclature of the scrutinized parameters, namely CSR, ROA, and NI. The term Form

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denotes whether the examination was conducted on the variable in its innate state Level
or subsequent to the process of differencing Differenced. Differencing, a prevalent
method, aims to confer stationarity upon non-stationary time series. Statistics in
Original State The subsequent column, labeled Level Statistics, encapsulates the
computed test statistic when the evaluation is applied to the variable in its original state
Level. Concurrently, the P-Value Level signifies the statistical measure associated with
the Level Statistics. This numerical representation signifies the likelihood that the
derived test statistic occurred due to mere chance. In the realm of hypothesis testing, a
diminutive p-value, typically below.

8. Discussion

8.1 Implications of the Findings

Implications of After-Tax CSR Expenditures by Non-Conventional Banks in
Bangladesh

8.1 Insights from System Dynamic Panel-Data

Estimations
Table 5 portrays a salient picture of system dynamic panel-data estimations,
specifically, the Autoregressive Model of Order 1 AR 1 and Panel Vector
Autoregression PVAR. The AR 1 model unveils a fascinating dimension where the
impact of past CSR investments on current CSR allocations becomes evident. Its
noteworthy that prior-year CSR growth exerts a significantly positive influence on the
CSR expenditure of the current year. In practical terms, a 1 percent upswing in CSR at
t-1 leads to an approximately 0. 8 percent rise in CSR at t. This observation underscores
the cultural shift in the Bangladeshi banking sector towards embracing corporate
philanthropy, where CSR decisions are influenced, at least in part, by the preceding
years CSR commitments.

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 8.2 Determinants of CSR Factors
Table 6 delves into the analysis of factors that influence CSR expenditure. Its worth
noting that financial performance indicators often exhibit a significant association with
CSR, albeit with a few exceptions. Notably, Net Income NI emerges as a robust
predictor of CSR across the board, corroborating prior research such as Sun 2012. This
observation aligns with economic and intuitive logic, where an increase in net income
triggers a subsequent rise in CSR spending. Conversely, Return on Assets ROA, an
additional measure of financial control, exhibits a statistically significant non-linear
impact.

Discussions

The bidirectional causality between CSR and Corporate Financial Performance CFP
serves as the foundational premise for this study’s analytical scrutiny. It employs a
multidimensional approach to dissect the CSR-CFP relationship. The research aims to
synthesize empirical literature and validate the theoretical constructs surrounding CSR.
However, the study concludes that no discernible bidirectional causality exists between
CSR and CFP. Furthermore, CFP appears to exert influence on CSR, but the reverse
causality, where CSR influences CFP, remains elusive. Notably, CFP manifests a
quadratic impact on CSR. These findings underscore the overarching empirical
estimations alignment with theoretical postulations. In summary, the research points
towards a narrative where Bangladeshi banks engage in CSR primarily out of social
responsibility, with the financial aspect playing a lesser role.

8.3 Theoretical and Practical Contributions

The realm of corporate social responsibility CSR stands as a fundamental and legitimate
subject of inquiry within the intricate relationship between businesses and society. The
concept has attained mainstream recognition over recent decades. Investors,
corporations, consumers, and scholars have scrutinized and assessed the choices
businesses make regarding social responsibilities. In light of this, three pivotal
questions arise Firstly, do businesses bear moral and ethical obligations to the

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community Second, do socially responsible programs contribute to a companys
financial well-being, especially in the long term Lastly, is CSR merely a social virtue,
motivated by peer influence These questions have been at the heart of academic scrutiny
concerning CSR. It is pivotal to note that CSR serves as a strategic tool for corporate
legitimacy and social governance. Invariably, all corporate decisions are weighed
against financial probity. The diverse opinions on CSRs significance are evident in the
stark contrast between Nobel laureates Paul Samuelsons strong endorsement and
Milton Friedmans vehement opposition. The Significance of CSR The social
responsibilities undertaken by corporations go beyond legal obligations to encompass
moral standards and ethical practices.

8.4 Managerial Implications

Managerial Implications of After-Tax CSR Spending by Non-Conventional Banks in
Bangladesh Corporate social responsibility CSR has evolved into a significant concept
in the domains of business and societal relations. For several decades, it has been
acknowledged as a mainstream subject in academic literature, offering insights into the
complex interplay between corporations and various stakeholders within society. This
article delves into a comprehensive examination of CSR spending by non-conventional
banks in Bangladesh, aiming to elucidate the implications and consequences of these
financial commitments. Challenging the Notion of CSR The concept of CSR prompts
us to contemplate several questions Do businesses bear moral and ethical
responsibilities toward the community Does engaging in socially responsible programs
translate to long-term financial benefits for firms Or is CSR merely a social virtue
driven by societal pressures and peer influence These inquiries have formed the crux of
academic discourse on CSR. CSR, in essence, is a strategic approach adopted by firms
to ensure mutual benefits for both the organization and society. It serves as a means of
establishing corporate legitimacy and social control. Corporate decisions are invariably
weighed against financial integrity as an indicator of their justification. There is a
divergence of opinions regarding the adoption of CSR. While Nobel laureate Paul
Samuelson vigorously endorsed corporate engagement in social responsibility, his
fellow laureate Milton Friedman expressed a vehemently contrasting view, suggesting
that advocating social responsibility within a free-market system bordered on socialism.

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9. Conclusion
9.1 Summary of Key Findings
The Relationship Between CSR and CFP
Bidirectional Causality: An Ongoing Debate
Influence of Economic and Institutional Variables
Social Cues vs. Financial Health in CSR Engagement

9.2 Contributions to the Field

Challenging the Bidirectional Causality Assumption
Factors Determining CSR Engagement

9.3 Implications for Non-Conventional Banks

Varying Impacts of CSR on Different Areas of Investment
CSR Engagement in Turkish Banks
Global Perspectives on CSR and Bank Performance

9.4 Future Research Directions

Quality and Credibility of CSR Reporting
Ethics and CSR in Banking
Expanding CSR Engagement in Developing Economies
The Role of Activist Organizations in Promoting CSR
Maximizing the Effect of CSR Disclosure in Banks

10. References
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4. Alam, S. S., Hoque, S. M., & Hosen, M. Z. (2010). Corporate social
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11. Bangladesh Bank. (2015). We shall overcome: Review of CSR activities of
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