In 2017, the Financial Services Authority released Financial Services Authority Regulation Number 51/POJK.03/2017 to increase social and environmental awareness of financial services in Indonesia. With the enactment of the regulation, corporate social responsibility (CSR) activities have become mandatory and used as a tool of the current marketing model for companies, especially banking companies. The more CSR activities that banking companies carry out on their environment, the better the company's image in the eyes of the public. In addition, investors will be more interested in companies with creative ideas by involving the community. This will increase the company’s profitability, including the returns that the company and investors will receive. Therefore, the influence between CSR and profitability needs to be studied to gain insight into the relationship between each other.
This study aims to determine whether there is an influence of corporate social responsibility on the profitability of the banking industry listed on the Indonesia Stock Exchange in the 2017-2021 period, with Return On Assets (ROA), Return On Equity (ROE), and Net Profit Margin (NPM) as a measurement of the dependent variable of profitability. Secondary data has been collected for nine qualified banking companies. The methodology used during this study is quantitative methods, with data panel regression analysis as a data analysis technique.
The results obtained from this study revealed that CSR has a significant and negative effect on the dependent variable ROA. Meanwhile, testing of the dependent variables ROE and NPM shows that CSR has no significant and negative effect.
Keywords: Corporate Social Responsibility, Profitability, Return On Assets, Return On Equity, Net Profit Margin