Banking for the Public Good: Access to Credit and the Nonprofit Sector

G. Nathan Dong ()
Additional contact information
G. Nathan Dong: Boston College

No GRU_2020_012, GRU Working Paper Series from City University of Hong Kong, Department of Economics and Finance, Global Research Unit

Abstract: Does local access to bank finance matter for social institutions providing public goods, such as college education and medical services, to the public? Bank loans is a valuable tool for strengthening nonprofit organizations’ financial stability and more importantly it enhances commitment to the mission by funding startup costs for social service programs. In this paper, we investigate the real effect of banking on the economic and social contribution of the nonprofit sector through the lens of relationship banking and market competition theory. We use the number of bank branches and the Herfindahl index of branch-level deposits in the 15-mile radius surrounding each nonprofit organization to measure the availability and competitiveness of local banking markets. We find that access to banking services is positively associated with the amount of social services provided by nonprofit organizations. The density of bank branches reduces obstacles to obtaining finance: the organization’s borrowing costs are lower in neighborhoods with more bank branches, and nonprofit performance is linked to a lower cost of borrowing.

Keywords: access to banking; nonprofit organization; corporate social responsibility (search for similar items in EconPapers)
JEL-codes: G21 G28 L31 (search for similar items in EconPapers)
Pages: 62 pages
Date: 2020-05-13
New Economics Papers: this item is included in nep-fdg
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.cb.cityu.edu.hk/ef/doc/GRU/WPS/GRU%232020-012%20Dong.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cth:wpaper:gru_2020_012

Access Statistics for this paper

More papers in GRU Working Paper Series from City University of Hong Kong, Department of Economics and Finance, Global Research Unit Contact information at EDIRC.
Bibliographic data for series maintained by GRU ( this e-mail address is bad, please contact ).