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How Costly is Social Screening? Evidence from the Banking Industry

Simon Cornée, Panu Kalmi and Ariane Szafarz

No 17-026, Working Papers CEB from ULB -- Universite Libre de Bruxelles

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: G20 L33 J32 L31 D63 D82 G21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-acc, nep-ban and nep-hme
Date: 2017-10-23
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Journal Article: How Costly is Social Screening? Evidence from the Banking Industry (2018) Downloads
Working Paper: How costly is social screening? Evidence from the banking industry (2018)
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