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Selectivity and Transparency in Social Banking: Evidence from Europe

Listed author(s):
  • Simon Cornée
  • Panu Kalmi
  • Ariane Szafarz

How do social banks signal their social commitment to motivated funders? This paper hypothesizes that two main channels are used, namely selectivity and transparency. We test these predictions using a rich dataset comprising balance-sheet information on 5,000 European banks over the 1998-2013 period. The results suggest that social screening leads social banks to higher project selectivity compared with mainstream banks. Social banks also tend to be more transparent than other banks. However, combining selectivity and transparency can result in excess liquidity. Overall, the empirical findings not only confirm our theoretical hypotheses, but also raise challenging issues on the management of social banks.

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File URL: https://dipot.ulb.ac.be/dspace/bitstream/2013/221488/3/wp15047.pdf
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Paper provided by ULB -- Universite Libre de Bruxelles in its series Working Papers CEB with number 15-047.

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Length: 18 p.
Date of creation: 01 Dec 2015
Publication status: Published by:
Handle: RePEc:sol:wpaper:2013/221488
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