Social and alternative banking: project selection and monitoring after the New Basel Capital Accord
AbstractAny economic activity calls for the exercise of moral judgement. There are some economic activities that actively promote collective benefit as a primary or secondary aim, and there are others that aim to increase the value of a firm. Investment decisions always have collective impact, but collective returns may be ignored or considered less important in company management if the objective is the maximisation of shareholder wealth. The allocative function exercised by banks in their credit activity may take this into account. Some banks nowadays focus on social profile, while others integrate the traditional approach with this new sensibility. But unfortunately banking regulations governing stability and soundness of the financial system make no mention of the social profile. The New Basel Capital Accord was an opportunity to recognise that bank's objectives may not consist only of the maximisation of shareholder wealth. But it was a missed opportunity, in that it gave advantages to traditional commercial banks and not to banks focussing on collective goals. This paper puts forward proposals for integrating the Basel II framework with profiles of collective bank credit policy. Social credit evaluation methods could help to identify those ethical banks which are more successful in meeting collective objectives. A sustainable credit appraisal methodology could have been examined by the Basel Committee and could have incentivated sustainable banking by giving it specific advantages.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Department of Economics, Parma University (Italy) in its series Economics Department Working Papers with number 2005-EF01.
Length: 27 pages
Date of creation: 2005
Date of revision:
social banking; alternative banking; socially responsible investing; investments appraisal; Basel II; new capital accord;
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kim, Daesik & Santomero, Anthony M, 1988. " Risk in Banking and Capital Regulation," Journal of Finance, American Finance Association, vol. 43(5), pages 1219-33, December.
- Bhattacharya Sudipto & Thakor Anjan V., 1993. "Contemporary Banking Theory," Journal of Financial Intermediation, Elsevier, vol. 3(1), pages 2-50, October.
- João A. C. Santos, 2000. "Bank capital regulation in contemporary banking theory: a review of the literature," BIS Working Papers 90, Bank for International Settlements.
- Andrea Sironi, 2000.
"An analysis of European banks SND issues and its implications for the design of a mandatory subordinated debt policy,"
Finance and Economics Discussion Series
2000-41, Board of Governors of the Federal Reserve System (U.S.).
- Andrea Sironi, 2001. "An Analysis of European Banks' SND Issues and its Implications for the Design of a Mandatory Subordinated Debt Policy," Journal of Financial Services Research, Springer, vol. 20(2), pages 233-266, October.
- Allen N. Berger & Richard J. Herring & Giorgio P. Szego, 1995.
"The role of capital in financial institutions,"
Finance and Economics Discussion Series
95-23, Board of Governors of the Federal Reserve System (U.S.).
- Pringle, John J, 1974. "The Capital Decision in Commercial Banks," Journal of Finance, American Finance Association, vol. 29(3), pages 779-95, June.
- Larry D. Wall & Pamela P. Peterson, 1998. "The choice of capital instruments," Economic Review, Federal Reserve Bank of Atlanta, issue Q 2, pages 4-17.
- Donald Davis & Kevin Lee, 1997. "A Practical Approach To Capital Structure For Banks," Journal of Applied Corporate Finance, Morgan Stanley, vol. 10(1), pages 33-43.
- Taggart, Robert A, Jr & Greenbaum, Stuart I, 1978. "Bank Capital and Public Regulation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 10(2), pages 158-69, May.
- D. Tondani, 2006. "Estimating the effects of personal income tax on labour supply in Italy," Economics Department Working Papers 2006-EP03, Department of Economics, Parma University (Italy).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Andrea Lasagni).
If references are entirely missing, you can add them using this form.