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Is there a difference in financing efficiency? Conventional banks versus ethical banks

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Listed:
  • Juan José Durán Herrera
  • María José García López
  • Carmen Avilés Palacios
  • Oriol Amat

    ()

Abstract

The current economic and financial crisis have underlying, to a certain extend, the short term perspective of the decision making processes of firms, specially of banks, and the weakness of principles and values in the design and selling of complex financial products. Within this context the demand of transparency and CSR has increasing. The named ethical banks appear as a model of supplying financial services with high potential for financing, especially for small firms as well as for individuals. In this paper we analyze and compare the return on assets and on equity over a period of five years of both Ethical Banks and Conventional Banks listed on Sustainability Index. For the empirical analysis we used a fixed data panel model and a Discriminant Function Analysis. We conclude that the conventional banks get higher rates of return, due to higher risk investments they undertake and to wider range of operations. But Ethical banks are more competitive when we compare them in terms of the real economy.

Suggested Citation

  • Juan José Durán Herrera & María José García López & Carmen Avilés Palacios & Oriol Amat, 2016. "Is there a difference in financing efficiency? Conventional banks versus ethical banks," Economics Working Papers 1512, Department of Economics and Business, Universitat Pompeu Fabra.
  • Handle: RePEc:upf:upfgen:1512
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    References listed on IDEAS

    as
    1. Simon Cornée & Ariane Szafarz, 2014. "Vive la Différence: Social Banks and Reciprocity in the Credit Market," Journal of Business Ethics, Springer, vol. 125(3), pages 361-380, December.
    2. Viral V. Acharya & Iftekhar Hasan & Anthony Saunders, 2006. "Should Banks Be Diversified? Evidence from Individual Bank Loan Portfolios," The Journal of Business, University of Chicago Press, vol. 79(3), pages 1355-1412, May.
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    More about this item

    Keywords

    Ethical banking; Corporate Social Responsibility; banking and finance.;

    JEL classification:

    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration

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