The Impact of Banks’ Financial Performance and Its Market Value on Social Responsibility: An Applied Study on The Banking and Financial Services Sector in The Palestine Stock Exchange

Abstract

The aim of this study is to investigate the impact of both the financial performance indicators and the market value indicators on social responsibility in the banks listed on the Palestine Stock Exchange during the period (2011-2017). The study used the inductive method for the theoretical part and the deductive analytical approach for the applied part of the study. The results of the applied study showed a positive relationship between the Return on assets, Return on equity, Earnings per share, Tobin's Q and capital adequacy on Social Responsibility, and negative relation between other variables of the study, There were no statistically significant relationship between the variables of the study on social responsibility, except for the variable return on equity and return on stock. The null hypothesis was accepted at a lower level of significance of (0.05). There is a statistically significant effect between the traditional financial performance indicators represented in the return on equity and earnings per share on social responsibility. The multiple linear regression model was applied using the (F-Test) to proof the existence of relationships. All zero hypotheses were accepted. There was no statistically significant relationship between the variables of the study on social responsibility except the variable Return on equity and Earnings per share. Less than (0.05). Accordingly, There is statistically significant impact between the traditional financial performance indicators represented in the return on equity and earnings per share on social responsibility. The study recommends that the Palestinian Monetary Authority should also supervise the banks and ensure that the contribution of social responsibility is equal to at least 2% of the net profit and provide rewards to all those who commit.