Sustainable and conventional banking in Europe

Abstract

At the end of the 20 th century a new banking model, the so-called ethical banking, emerged becoming the maximum exponent of a socially responsible investment. The financial crisis in 2008 led to a distrust of the conventional financial system and consequently investors began to look with interest this new banking, which only invests in ethical activities and products, with social and environmental criteria, total transparency and a democratic management. The aim of this article is to analyze the economic structure of ethical banking, compared to that of conventional banking, by paying attention to its liquidity, coverage and solvency. Specifically, We compare the financial statements of Triodos Bank, the main European ethical bank belonging to the Global Alliance for Banking on Values, with two of the main conventional banks of each of the five countries in Europe in which it operates. To do this, we apply a financial and economic analysis to the period from 2015 to 2018, the means difference test and analysis of variance on an array of financial ratios and, finally, probit regressions. The results reveal that ethical banking is growing more than conventional banking and it presents greater liquidity and solvency, although, in general terms, its profitability is not higher. In conclusion, both savers and investors have guarantees that their savings are invested not only in a responsible but also in a confident way in ethical banking.

Ethical Banking and Poverty Alleviation Banking: The Two Sides of the Same Solidary Coin

“…In the 20th century, the Pax World Fund, the first Socially Responsible Mutual Fund in the United States, emerged in 1971 as part of the pacifist movements that emerged as a result of the Vietnam War [14]. It also appeared as a resounding response to the financial exclusion of people who did not have access to basic banking products to provide them with minimum financing to help them to undertake projects or businesses with a significant social impact, linked to the concepts of Socially Responsible Investment (SRI) and Corporate Social Responsibility (CSR) [15][16][17].…”

“…The terminology used to refer to this set of banking practices is quite broad, e.g., "Sustainable banking", "Social banking", "Regenerative banking", "Value-based banking" or "Alternative banking" [14,29]. However, the term "Social banking" is much broader, as it includes savings banks [30], Cooperative banking [17,31] as well as ethical banking; all of them have a common link consisting of responding to the credit needs of any group affected by financial exclusion [17], in addition to focusing on environmental sustainability criteria, one of the cornerstones of these institutions.…”

“…The purpose of the former is to support the growth of companies, generally small and medium-sized enterprises, by providing financing for projects with strictly social, cultural and environmental purposes. The latter are aimed at granting financial assistance through the concession of microcredits to any marginalized individual located in disadvantaged countries that do not have any access to loans due to their social exclusion, in an attempt to contribute to enhance their development and to stimulate the growth of those communities stricken by poverty [14,41]. The representative principles of the GABV are summarized in Table 2:…”

“…For their part, Poverty Alleviation Banks, also known as microfinance banks, focus on fostering the development of the economic potential of individuals lacking economic resources, as well as on helping the development of communities located in marginal areas of generally underdeveloped countries by granting microcredits, thus, enabling their inclusion in society [14].…”

Women on corporate boards and sustainable development in the American and European markets: Is there a limit to gender policies?

“…However, in the 1990s, with the eruption of some international financial, environmental and social scandals, codes of ethics and conduct began to proliferate because of the need to control risks. This marked the beginning of firms' search for sustainable business models (Valls Martínez, 2019; Valls Martínez, Cruz Rambaud, & Parra Oller, 2020; Velte, 2017b). Since then, interest in social and environmental problems has been growing, and firms usually publish CSR reports along with financial information.…”