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Is Acting Prosocially Beneficial for the Credit Market?

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  • Luca Andriani

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.

Suggested Citation

  • Luca Andriani, 2014. "Is Acting Prosocially Beneficial for the Credit Market?," Review of Social Economy, Taylor & Francis Journals, vol. 72(3), pages 354-378, September.
    • Handle: RePEc:taf:rsocec:v:72:y:2014:i:3:p:354-378
    DOI: 10.1080/00346764.2014.927724
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    References listed on IDEAS

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    1. Silvia Magri, 2006. "Debt maturity of Italian firms," Temi di discussione (Economic working papers) 574, Bank of Italy, Economic Research and International Relations Area.
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    Cited by:

    1. Domenico CORTESE, 2017. "The dominion of means over ends. Modern bank credit and Max Weber’s irrational rationalization," The Journal of Philosophical Economics, Bucharest Academy of Economic Studies, The Journal of Philosophical Economics, vol. 10(2), pages 65-101, May.
    2. Michael Carr & Aurelie Charles & Wilfred Dolfsma & Robert McMaster & Tonia Warnecke, 2015. "Effective Contributions to the Review of Social Economy and Social Economics—Editorial," Review of Social Economy, Taylor & Francis Journals, vol. 73(2), pages 139-145, June.

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