Stakeholder Engagement: Some Empirical Evidence from a Sample of European Banks

Abstract

Our paper aims to analyse the practice of Stakeholder Engagement (SE) in the banking sector and to investigate if SE affects European bank profitability. To identify how banks engage stakeholders we developed a model for calculating an original "SE rating", that comes from four research areas: "Disclosure", "Stakeholders engaged", "Instruments of engagement", and "Management of the SE process". We then provided empirical evidence about the relationship between bank performance and SE rating through a panel analysis. Our evidence shows that commitment to SE should be increased significantly by focusing on organisation and management issues, and - to a lesser extent - on disclosure towards the market. Finally, our econometric study shows that relationship between SE rating and bank performance is not statistically significant, most likely due to the recent approach of banks to SE practice.