This paper examines whether the engagement of corporate social responsibility (CSR) influences bank's economic efficiency. We compile different CSR scores from EIRIS database spanning 2003-2014 and estimate a directional input distance function with endogenous inputs and a cost frontier. The allocative inefficiency is found to outweigh technical inefficiency and most environmental variables significantly affect various inefficiencies. The exclusion of the environmental variables leads to under-estimation of efficiency scores. During the period of the financial crisis of 2007-2009, efficiency measures regress. Banks operating in Europe and America outperform those in Asia. Finally, the omission of undesirables incurs lower technical inefficiency estimates.
