THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY AND CORPORATE GOVERNANCE ON BANK EFFICIENCY. COMPARATIVE ANALYSIS OF CONSOLIDATED AND NON- CONSOLIDATED BANKS

This study investigates the impacts of corporate social responsibility (CSR) and corporate governance of consolidated and non-consolidated banks on cost efficiency. Taking 37 banks of Taiwan from 2008 to 2016 as the sample and employing stochastic frontier analysis (SFA), we separately discuss these impacts and then use the stochastic metafrontier approach (SMA) to compare the difference in cost efficiency between consolidated banks and non -consolidated banks. The empirical results show that, first, CSR exerts its influence on consolidated banks and improves bank efficiency. Second, in the corporate governance part, the more diverse a board's backgrounds are, the greater is the efficiency of the consolidated bank, while an increase in the share of independent directors in the non-consolidated bank reduces its cost efficiency. In the bank characteristic part, when the proportion of foreign shareholding rises, the cost efficiency of banks declines regardless of consolidated banks or non-consolidated banks. Finally, whether measured by the technology gap ratio (TGR) or meta-cost efficiency (MCE), the efficiency of consolidated banks is better than that of non -consolidated banks.