Sustainable Profitability of Ethical and Conventional Banking

Contemporary Economics, Vol. 12. No. 4, pp. 519-530, 2018

12 Pages Posted: 9 May 2019

Date Written: July 30, 2018

Abstract

In recent years, social movements have echoed calls for greater social and environmental responsibility. Although financial institutions promote development, consumers have lost confidence in banks. As we enter the Fintech era, banks have the opportunity to use new tools that enable greater transparency for customers. Corporate social responsibility (CSR) plays a key role in increasing social awareness of regulators, society, shareholders, and employees — in short, stakeholders. This study therefore focuses on banks that have designed their activities and investments to contribute to sustainability. The principal contribution of this paper is to show the existence of a range of business models that arise following different responses by different types of banks. These different responses occur because the primary objective of sustainable banks is to meet the needs of stakeholders and contribute to sustainable development, whereas conventional banks simply apply and execute CSR policies. It is possible to differentiate between ethical banks and commercial banks. To ensure economic progress and achieve sustainability, it is fundamental to balance economic profitability with people’s social and environmental aspirations.

Keywords: ethical banking; sustainable banking; corporate social responsibility; CSR; Fintech

JEL Classification: G21, Q01, Q56

Suggested Citation

Costa-Climent, Ricardo and Martínez-Climent, Carla, Sustainable Profitability of Ethical and Conventional Banking (July 30, 2018). Contemporary Economics, Vol. 12. No. 4, pp. 519-530, 2018, Available at SSRN: https://ssrn.com/abstract=3378576

Ricardo Costa-Climent

Linnaeus University ( email )

Växjö, S-35195
Sweden

Carla Martínez-Climent (Contact Author)

Universitat de València ( email )

Spain

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