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How Costly is Social Screening? Evidence from the Banking Industry

Simon Cornée () and Ariane Szafarz
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Simon Cornée: Université de Rennes 1, CREM CNRS, and CERMi

Economics Bulletin, 2018, vol. 38, issue 1, 532-540

Abstract: Social banks screen loan applicants by using both social and financial criteria, and social screening implies an extra workload. To check the costs involved in this type of screening we use balance-sheet information on European banks, and compare the operating costs of social banks with those of other banks. Surprisingly, our first results suggest that social banks' costs are not significantly higher than those of their mainstream counterparts. Next, we uncover that the extra costs of social screening are offset by a cheaper workforce. Despite their need for specific screening, social banks are financially sustainable in a market dominated by for-profit institutions.

Keywords: Social Screening; Social Banks; Screening Costs; Warm Glow (search for similar items in EconPapers)
JEL-codes: G2 L3 (search for similar items in EconPapers)
Date: 2018-03-23
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