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

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  • Simon Cornée

    ()
    (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes 1 - Université de Caen Basse-Normandie, CERMi - Centre for European Research in Microfinance)

  • Ariane Szafarz

    ()
    (CERMi - Centre for European Research in Microfinance, Centre Emile Bernheim - Université Libre de Bruxelles (ULB) - SBS-EM)

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.

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Bibliographic Info

Paper provided by HAL in its series Post-Print with number halshs-00874615.

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Date of creation: 2013
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Publication status: Published, Journal of Business Ethics, 2013, online
Handle: RePEc:hal:journl:halshs-00874615

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Keywords: Social bank; reciprocity; social identity;

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Citations

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Cited by:
  1. Simon Cornée, 2014. "Soft Information and Default Prediction in Cooperative and Social Banks," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201402, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
  2. Amélie Artis & Simon Cornée, 2013. "Transformation informationnelle, certification et intermédiation financière : le cas de la banque solidaire," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201326, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.

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