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Journal of Business Ethics

, Volume 125, Issue 3, pp 361–380 | Cite as

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

  • Simon CornéeEmail author
  • Ariane Szafarz
Article

Abstract

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.

Keywords

Social bank Reciprocity Social identity 

Notes

Acknowledgments

The authors thank Yiorgos Alexopoulos, Francesca Barigozzi, Régis Blazy, Carlo Borzaga, Damien Brousolle, Isabelle Cadoret, Anastasia Cozarenco, Jacques Defourny, Joeffrey Drouard, Silvio Goglio, Marek Hudon, Marc Jegers, Panu Kalmi, Georg Kirchsteiger, Philipp Koziol, Marc Labie, Neil McHugh, Fabien Moizeau, Jonathan Morduch, Tomasso Oliveiro, Anaïs Périlleux, Jose Luis Retolaza, Michael Roberts, Leire San-Jose, Jessica Schicks, Hubert Tchakoute Tchuigoua, Piero Tedeschi, Gregory Udell, Olaf Weber, Laurent Weill, the participants at the CERMi Seminar, ULB (May 2012), the “Cooperative Finance and Sustainable Development” Conference at the University of Trento (June 2012), the “Frontiers of Finance” Workshop at the Paris Panthéon Sorbonne University (October 2012), the Workshop on SME Finance at the University of Strasbourg (April 2013), the Third European Research Conference on Microfinance at the University of Agder (June 2013), the “Finance and Society” Workshop at BEM/KEDGE Business School (June 2013), the EMES Conference in Liège (July 2013), as well as an anonymous referee for helpful comments and discussions. This research has been carried out in the framework of an “Interuniversity Attraction Pole” on social enterprise, funded by the Belgian Science Policy Office.

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Copyright information

© Springer Science+Business Media Dordrecht 2013

Authors and Affiliations

  1. 1.Faculté des Sciences EconomiquesUniversité de Rennes 1, CREM UMR CNRS 6211, and CERMiRennes CedexFrance
  2. 2.Université Libre de Bruxelles (ULB), SBS-EM, CEB, and CERMiBrusselsBelgium

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