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

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  • Simon Cornée
  • Ariane Szafarz

Abstract

Social banks are financial intermediaries paying attention to non-economic (i.e. social, ethical, and environmental) criteria. This paper investigates the behavior of social banks in the European credit market. We use a unique hand-collected dataset on 389 business loans granted by a French social bank. Our results show that the social bank charges below-market interest rates for viable social projects. Moreover, regardless of their creditworthiness, motivated borrowers respond to advantageous credit conditions 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 ULB -- Universite Libre de Bruxelles in its series Working Papers CEB with number 12-029.

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Length: 37 p.
Date of creation: 15 Oct 2012
Date of revision:
Publication status: Published by:
Handle: RePEc:sol:wpaper:2013/129733

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Keywords: Social bank; subsidized loan; social enterprise; ethical bank; start-up;

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References

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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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