Selectivity and Transparency in Social Banking: Evidence from Europe

Journal of Economic Issues, 50(2), 2016, 494-502.

17 Pages Posted: 22 May 2018

See all articles by Simon Cornée

Simon Cornée

Université de Rennes 1 - CREM CNRS

Panu Kalmi

University of Vaasa

Ariane Szafarz

Université Libre de Bruxelles, Solvay Brussels School of Economics and Management, Centre Emile Bernheim (CEB) & CERMi

Date Written: May 1, 2016

Abstract

How do social banks signal their social commitment to motivated funders? This paper hypothesizes that two main channels are used, namely selectivity and transparency. We test these predictions using a rich dataset comprising balance-sheet information on 5,000 European banks over the 1998-2013 period. The results suggest that social screening leads social banks to higher project selectivity compared with mainstream banks. Social banks also tend to be more transparent than other banks. However, combining selectivity and transparency can result in excess liquidity. Overall, the empirical findings not only confirm our theoretical hypotheses, but also raise challenging issues on the management of social banks.

Keywords: Social banks, Ethical banks, Social enterprises, Social mission, European banks

JEL Classification: G21, D14, O16

Suggested Citation

Cornée, Simon and Kalmi, Panu and Szafarz, Ariane, Selectivity and Transparency in Social Banking: Evidence from Europe (May 1, 2016). Journal of Economic Issues, 50(2), 2016, 494-502.. Available at SSRN: https://ssrn.com/abstract=3174351

Simon Cornée

Université de Rennes 1 - CREM CNRS ( email )

7 place Hoche
Rennes, Bretagne 35065
France

Panu Kalmi

University of Vaasa ( email )

P.O. Box 700
Wolffintie 34
FIN-65101 Vaasa, FI-65101
Finland

Ariane Szafarz (Contact Author)

Université Libre de Bruxelles, Solvay Brussels School of Economics and Management, Centre Emile Bernheim (CEB) & CERMi ( email )

50 Avenue Roosevelt
Brussels 1050
Belgium

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