| This study extends research on the relationship between provided levels of Corporate Social Responsibility and marginal cost. It is an econometric analysis of 379 small, urban, Federally-regulated Savings and Loan institutions over the period 1995--1998. Use is made of Community Reinvestment Act ratings as a social performance measure. A stochastic frontier variable cost function is estimated, and the cost of improving one rating beyond the satisfactory level, holding all other factors constant, is the marginal cost associated with providing an enhanced level of social responsibility. Results indicate that based upon a mean cost inefficiency 21 percent, the marginal cost of providing enhanced social responsibility over these four years was approximately {dollar}390,000 annually. |
