Impact of Corporate Social Responsibility and Enterprise Risk Management on Financial Performance of Islamic Banks: A Conceptual Framework

This study presents a conceptual framework that employs enterprise risk management (ERM) as a mediator to better understand how corporate social responsibility (CSR) practices contribute to enhancing financial performance (FP). Past studies examining the direct relationship between CSR and FP have produced inconsistent results, often explained using mediating variables. This paper contends that the influence of CSR practices on financial performance can be explained by ERM. The study draws on the literature on CSR-ERM-FP nexus and expands it to the banking sector, focussing on Islamic banks, where such research remains limited. This study adopts stakeholder theory and signalling theory as the underpinning theories in developing the conceptual models to offer insights into the CSR-ERM-FP relation. We propose a quantitative approach using content analysis method to obtain data on Islamic banks' CSR practices, alongside secondary data from DataStream on ERM and FP.