Is Acting Prosocially Beneficial for the Credit Market?

Luca Andriani

Review of Social Economy, 2014, vol. 72, issue 3, 354-378

Abstract: This article argues that behaving prosocially reduces regional finance differentials in terms of interest and insolvency rates. This is because prosociality implies more transparent information and cooperation among the parties engaged in a financial contract. The context of study is Italy, well known for its regional economic and financial disparities. The analysis is developed through a cross-regional two period panel model during the years 1998 and 2003. Empirical evidence shows that regions with a higher proportion of prosocial individuals report lower interest and insolvency rates. When legal enforcement is included in the specified model, evidence suggests that more efficient third-party enforcement can transmit a stronger sense of legal abidance and facilitate the internalisation of social norms of cooperation.

Date: 2014
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DOI: 10.1080/00346764.2014.927724

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