Sub-theme 2.3. Specific intermediaries - Social Banking

Sub-theme 2.3. Specific intermediaries - Social Banking

Our research program is twofold. Our first objective consists in building a novel theoretical model that accounts for the social banks’ raison d’être and behaviour in the credit market. This model is to contrast not only with the typical capitalistic bank model, but also with the microfinance institution model (studied in the sub-theme 2.4.). Indeed, social banks in developed countries evolve in a competitive environment where equilibrium interest rates are determined by the market. This model is to allow us to analytically derive the determinants of the social bank’s loan pricing policy and the way these banks adapt themselves to the double-bottom line specificity of their target. In this sense, this sub-theme aims to offer theoretical insights that could be generalized to social enterprises. Our model intends also to be more general than that of Barigozzi and Tedeschi (2011) regarding the assumption made on the loan applicants. Indeed, we assume that on top of knowingly social enterprises and for-profit firms, the set of potential borrowers includes start-ups of which social outcome is uncertain. Secondly, we are to test our theoretical findings using a unique hand-collected dataset including detailed information on 389 business loans granted by a French social bank.