Banking with Ethics: Strategic Moves and Structural Changes of the Banking Industry in the Aftermath of the Subprime Mortgage Crisis

Elisabeth Paulet (), Mia Parnaudeau and Francesc Relano
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Elisabeth Paulet: ICN Business School, CEREFIGE - Centre Européen de Recherche en Economie Financière et Gestion des Entreprises - UL - Université de Lorraine
Francesc Relano: ICN Business School, CEREFIGE - Centre Européen de Recherche en Economie Financière et Gestion des Entreprises - UL - Université de Lorraine

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Abstract: There are two major types of financial innovations: one which is profit-seeking and supply-driven; another which is mostly demand-driven, outward-looking and socially oriented. We illustrate this twofold perspective analyzing the behavior of the banking industry during the period of the subprime mortgage crisis. More precisely, we examine how the financial statements of different types of banks are linked to innovation theories. From this analysis it emerges that, unlike mainstream banking, only the so-called ethical banks can be said to be putting into effect a demand-driven type of financial innovation in their banking practice. It is also argued that this involves a distinct business model. The last part of the paper explores briefly to what extent this demand-driven innovation approach to banking makes sense in the context of the post-financial crisis.

Keywords: shareholder-based banks; business model; innovative banking practices; stakeholder-based banks; ethical banks (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (21)

Published in Journal of Business Ethics, 2015, 131 (1), pp.199-207. ⟨10.3917/jie.020.0179⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01507995

DOI: 10.3917/jie.020.0179

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