The Role of Social Banking in the Success and Sustainable Business Continuity of SSMEs

Eirini Stavropoulou, Konstantinos Spinthiropoulos, Alexandros Garefalakis, Konstantina Ragazou () and Fragkiskos Gonidakis
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Eirini Stavropoulou: Department of Management Science and Technology, University of Western Macedonia, GR50100 Kozani, Greece
Konstantinos Spinthiropoulos: Department of Management Science and Technology, University of Western Macedonia, GR50100 Kozani, Greece
Alexandros Garefalakis: Department of Business Administration and Tourism, Hellenic Mediterranean University, GR71410 Heraklion, Greece
Konstantina Ragazou: Department of Economics and Business, Neapolis University Pafos, Pafos 8042, Cyprus
Fragkiskos Gonidakis: Department of Business Administration, University of West Attica, GR12241 Athens, Greece

IJFS, 2023, vol. 11, issue 3, 1-15

Abstract: The technological developments in the social economy have significant implications for social banks and are optimistically changing the way social retail banks conduct their business. Social banks can invest in social services for small- and medium-sized enterprises (SSMEs) either to acquire a strategic advantage or out of strategic necessity. With the assistance of a mathematical model, this study tries to identify SME service channels and assess potential impacts on social deposit banks’ performance. In the first stage, the proposed model estimates the predictive capacity of interpretive accounting variables (financial ratios) versus the interpreted accounting variable (future quarterly earnings before taxes (EBT)). Then, in the second stage, the SSME service channels were added to the earnings before tax model in terms of profitability measure, which informs corporate earnings before operating the business to account for the income tax attributed to it for the purpose of estimating their impact on the performance of social banks. According to our findings, the banks are investing in SME services just to validate their investments in SME services as a strategic necessity. SSMEs services do not provide any strategic advantage to any banks in terms of financial or accounting performance or efficiency since the banks are already efficient. Investing in SMEs is a tool for preserving their strategic positions. Therefore, the contribution of this study is focused on the fact that it highlights the impact of financing the social deposit banking industry on institutions, while most studies analyze the vice versa interaction.

Keywords: social banking; ethical banking; efficiency; financial return; capital ratio; sustainability (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2023
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