The Impact Of Financial Institutions On The World 's Social Problems

Social responsibility makes a company more competitive and reduces the risk of sudden damage to the company’s reputation and sales.

Because corporations are established to profit and shareholders invest money with expectations of a greater return, managers cannot be given a directive to be “socially responsible” without providing specific criteria of checks and balances to which needs to adhere. Therefore, it is imperative to the success of a corporation for managers to not act solely but rather to act within the policies of the shareholders.

or so many years our society has been thinking of forming new creative and innovative businesses, which would be more environmental and customer friendly. Nowadays a large number of different companies follow the social, ethical, as well as moral consequences when it comes to their decision making. One of the relatively new concepts involving economic and social concerns is Corporate Social Responsibility. Many of us apply this approach not only at work, but also in everyday life without even recognizing.

In spite of all advantages mention earlier about ethically and socially responsible business practice, it also has disadvantages, limitation and challenges. The most common and obvious limitation would be the cost that comes together with every investment a business does in order to meet all publicity’s requirements, for instance setting up Ronald McDonald House Charities. Every business has a goal which is at the top of their goal list and it is to be profitable. What is more, it is challenging to maintain the publicity’s and stakeholders’ satisfaction when investing into the society, employees and the environment.

Many believe that business entities should have an ethical duty to be socially responsible, to work towards increasing its positive effects on society while decreasing its negative effects. Many organizations look for opportunities to be socially responsible while also creating shareholder wealth.

When an organization partakes in “proactive behavior…for the benefit of society,” it is deemed as socially responsible (P. 155). However, prior to labeling a organization as socially responsible, it is important that we first identify what specific elements of proactive behavior constitute a socially responsible business. To begin, for an organization to be considered socially responsible on the highest level, it must take a proactive approach to doing business. This is defined as “[taking a] approach to social responsibility in which an organization goes beyond industry norms to solve and prevent problems” (P.155). In addition, it is standard for a socially responsible organization to incorporate a larger scope of stakeholders, to include external stakeholders, in their business decisions to create positive externalities, and mitigate negative ones, to benefit society as a whole.

Social impact bonds have a very clear intention to improve the community in a fair and legitimate way; however, many people criticize this investing model because of the return rate of profits on the initial investment and the guarantee of the investors’ money back for certain parties. The social impact bond investing model was originally created to focus on impacting social change rather than making a profit. Because of this, even when social programs were successful, rates of return were expected to be minimal at best simply to reward the investors for taking time, effort, and money to help improve at risk communities. However, people became outraged when they discovered that Goldman Sachs was making a significant return on investment. One of the most highly publicized SIB’s, like mentioned before, is one for the Riker’s Island recidivism project which Goldman Sachs decided to invest 9.6 million dollars into. While this seems generous, Goldman Sachs was theoretically supposed to receive a 22 percent return, resulting

Corporate Social Responsibility are actions taken by a corporation that have positive and lasting impact for all stakeholders associated with the organization, seeking to strike a balance between profits and helping to establish lasting investment in the community (Carrol, 2015). In the 1980’s, then President Reagan challenged the business community to take on more responsibility to address social problems (Carrol, 2015). Socially responsible actions can benefit local communities as well as the greater societal good.

Generation Y trusts socially responsible companies over any other company. They are 79% more likely to purchase from a socially responsible company and 74% are more likely to pay attention to the company’s message if it has dedication to a cause (C, 2006).

The recent financial crisis has a huge impact on systemic Important Financial Institutions; it’s distressing effect can be felt in almost every business area and process of a bank. A fairly large literature investigates the impact of financial crisis on large, complex and interconnected banks. The great recession did affect banks in different ways, depending on the funding capability of each bank. Kapan and Minoiu (2013) find that banks that were ex ante more dependent on market funding and had lower structural liquidity reduced supply of credit more than other banks during crisis. The ability of banks to generate interest income during the financial crisis was hampered because there was a vast reduction in bank lending to individuals and

Corporate social responsibility has been one the key business buzz words of the 21st century. Consumers' discontent with the corporation has forced it to try and rectify its negative image by associating its name with good deeds. Social responsibility has become one of the corporation's most pressing issues, each company striving to outdo the next with its philanthropic image. People feel that the corporation has done great harm to both the environment and to society and that with all of its wealth and power, it should be leading the fight to save the Earth, to combat poverty and illness and etc. "Corporations are now expected to deliver the good, not just the goods; to pursue

Social responsible programs are growing very rapidly. “Over the last two years, SRI investing has grown by more than 22% to $3.74 trillion in total managed assets, suggesting that investors are investing with their heart, as well as their head” (Chamberlain, 2013). Investors are caring about their

The corporate social responsibility for Investcorp is to assess and take responsibility for the company 's effects on environmental and social well-being. Switzerland is one of the countries that holds companies responsible for environmental well-being. The Swiss government imposes their economic actors to assume their responsibilities towards society. This means that the government is reinforcing the position of Swiss enterprises in terms not only of their competitiveness but also with respects to the part they perform in

As Kline (2017) stated, “Socially responsible companies can reduce their credit spread by 40%, avoid market losses from crises (saving millions), double the probability of receiving investment grade ratings, reduce share price volatility 2-10%, and reduce systematic or market risk by 4%.” More interestingly, Kline (2017) mentioned, “...the researchers found that corporate responsibility could potentially increase the market value of a company by up to 6% over a 15- year period. Market value may grow even more -- to 40-80% higher than peers ' and competitors ' market value -- for companies with strong relationships with stakeholders such as environmental and social NGOs.” Similarly, Kline (2017) voiced, “The study found several advantages on the human resources front due to retention of talent attracted to CR. Staff turnover rates are 25 to 50% lower in responsible companies, who can save around $3700 on average in wage increases to encourage an employee to stay when he or she would rather go elsewhere.” Kline (2017) brought up some engaging trends, “ In fact, in responsible companies 5% of employees say they are willing to accept a decline in compensation. These companies register a 7.5% increase in

Access to capital enables a company to grow and make timely investment. Companies with good CSR standing are likely able to secure equity and debt capital with most ease. The growth emphasis in Socially Responsible Investment (SRI) is a clear indication of likely future trends