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

  • 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)

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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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
Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00874615
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