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

Simon Cornée and Ariane Szafarz

Post-Print CEB, 2014, vol. 125, issue 3, 361-380

Abstract: Social banks are financial intermediaries paying attention to non-economic (i.e. social, ethical, and environmental) criteria. To investigate the behavior of social banks on the credit market, this paper proposes both theory and empirics. Our theoretical model rationalizes the idea that reciprocity can generate better repayment performances. Based on a unique hand-collected dataset released by a French social bank, our empirical results are twofold. First, we show that the bank charges below-market interest rates for social projects. Second, regardless of their creditworthiness, motivated borrowers respond to advantageous credit terms by significantly lowering their probability of default. We interpret this outcome as the first evidence of reciprocity in the credit market.

Keywords: Reciprocity; Social bank; Social identity (search for similar items in EconPapers)
JEL-codes: G21 D63 G24 H25 (search for similar items in EconPapers)
Date: 2014
Note: SCOPUS: ar.j
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Journal Article: Vive la Différence: Social Banks and Reciprocity in the Credit Market (2014) Downloads
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) Downloads
Working Paper: Vive la Différence: Social Banks and Reciprocity in the Credit Market (2013) Downloads
Working Paper: Vive la Différence: Social Banks and Reciprocity in the Credit Market (2012) Downloads
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