Mission and Profitability of Social Banks

20 Pages Posted: 10 Nov 2011

Date Written: November 10, 2011


Social banking is conducted by social, ethical or alternative banks, and partly by cooperative banks and credit unions. In contrast to conventional banks, social banks conduct their business to create a social or environmental benefit. Thus they follow the concept of social finance and blended return. This study analyses both, the missions of social banks and their financial figures. Based on the data of the members of the Global Alliance for Banking on Values we conducted a qualitative analysis of the missions of the member institutes. Furthermore we analyzed business and financial indicators of the banks in the sample. The results suggest that the banks follow the mission of social finance and prefer social impacts over financial returns without neglecting financial sustainability. With respect to financial indicators social banks are, though being still small, especially in the years 2007 to 2009 more profitable than conventional banks, and could increase their client base, profits and revenues. Regarding their financial health all institutes in the sample meet the Bank for International Settlements (BIS) capital ratio. Thus we conclude that it is possible to follow the concept of social finance and to be financially sustainable.

Keywords: Social finance, ethical banking, blended return, shared value, credit union, impact finance, financial return, capital ratio

Suggested Citation

Weber, Olaf, Mission and Profitability of Social Banks (November 10, 2011). Available at SSRN: https://ssrn.com/abstract=1957637 or http://dx.doi.org/10.2139/ssrn.1957637

Olaf Weber (Contact Author)

University of Waterloo ( email )

Waterloo, Ontario N2L 3G1

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