Vive la Différence: Social Banks and Reciprocity in the Credit Market

Simon Cornee and Ariane Szafarz

No 12-029, Working Papers CEB from ULB -- Universite Libre de Bruxelles

Abstract: Social banks are financial intermediaries paying attention to non-economic (i.e. social, ethical, and environmental) criteria. This paper investigates the behavior of social banks in the European credit market. We use a unique hand-collected dataset on 389 business loans granted by a French social bank. Our results show that the social bank charges below-market interest rates for viable social projects. Moreover, regardless of their creditworthiness, motivated borrowers respond to advantageous credit conditions by significantly lowering their probability of default. We interpret this outcome as the first evidence of reciprocity in the credit market.

Keywords: Social bank; subsidized loan; social enterprise; ethical bank; start-up (search for similar items in EconPapers)
JEL-codes: D63 G21 G24 H25 (search for similar items in EconPapers)
Pages: 37 p.
Date: 2012-10-15
New Economics Papers: this item is included in nep-ban, nep-hme, nep-mfd and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Vive la Différence: Social Banks and Reciprocity in the Credit Market (2014)
Journal Article: Vive la Différence: Social Banks and Reciprocity in the Credit Market (2014)
Working Paper: Vive la Différence: Social Banks and Reciprocity in the Credit Market (2014)
Working Paper: Vive la Différence: Social Banks and Reciprocity in the Credit Market (2014)
Working Paper: Vive la Différence: Social Banks and Reciprocity in the Credit Market (2013)
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