Ethical Banks: An Alternative in the Financial Crisis

36 Pages Posted: 11 Jun 2009 Last revised: 27 Aug 2009

See all articles by Leire San-Jose

Leire San-Jose

University of Huddersfield; University of the Basque Country - Department of Financial Economics II

José Luis Retolaza

AURKILAN Business Ethics Research Institute

Jorge Gutierrez-Goiria

University of the Basque Country - Department of Financial Economics II

Date Written: June 9, 2009

Abstract

This paper studies the differences between traditional financial intermediaries (commercial banks, saving banks and credit cooperatives) and ethical banks that focus on positive social and ethical values. The credit crisis calls into question the functionality and good performance of traditional banks. The full incorporation of ethical values and principles by traditional financial intermediaries might be a form to solve their misleading financial situation. We have analyzed four factors that theoretically mean ethical differences: information transparency, placement of assets, guarantees and participation. These four factors are grouped in an index called Radical Affinity Index (RAI). The paper is focused on the study of RAI using a sample of 120 European banks. The evidence shows, that transparency of information and placement of assets are factors that differentiate ethical banks and the rest of financial intermediaries. The guarantees and participation, which seemed to be useful factors to differentiate ethical aspects of banks, do not support clear evidence to the analysis. In sum, RAI is a functional and useful index to show the ethical policy of financial intermediaries.

Keywords: assets placement, ethical bank, guarantee, participation, radical affinity index, ranking, transparency

JEL Classification: G01

Suggested Citation

San-Jose, Leire and Retolaza, José Luis and Gutierrez-Goiria, Jorge, Ethical Banks: An Alternative in the Financial Crisis (June 9, 2009). Available at SSRN: https://ssrn.com/abstract=1416757 or http://dx.doi.org/10.2139/ssrn.1416757

Leire San-Jose (Contact Author)

University of Huddersfield ( email )

Queensgate
Huddersfield HD1 3DH, West Yorkshire HD1 3DH
United Kingdom

HOME PAGE: http://www2.hud.ac.uk/uhbs/staff/staff_profiles/leire_san-jose.php

University of the Basque Country - Department of Financial Economics II ( email )

Avenida del Lehendakari Agirre 83
48015 Bilbao
Spain

José Luis Retolaza

AURKILAN Business Ethics Research Institute ( email )

Spain

Jorge Gutierrez-Goiria

University of the Basque Country - Department of Financial Economics II ( email )

Avenida del Lehendakari Agirre 83
48015 Bilbao
Spain

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