Abstract
At the end of the 20th 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.
Highlights
As officially recognized by economic agents, the Lehman Brothers’ bankruptcy in 2008 marked the beginning of the financial crisis in the main developed countries, whose effects remain until today
Our findings show that in last years, conventional banking has decreased o experienced a low increase; on the contrary, ethical banking has had a high growth that has been financed by client funding, which implies that this kind of banking is more independent of the financial system
The main aim of this work is to study these parameters in ethical banking, in order to check its strength to face future problems and to make a comparison with conventional banking that demonstrates its reliability to depositors
Summary
As officially recognized by economic agents, the Lehman Brothers’ bankruptcy in 2008 marked the beginning of the financial crisis in the main developed countries, whose effects remain until today. Banks caused the financial crisis due to their irresponsible lending policies which led to a reckless accumulation of toxic assets. This led to a situation that no person could anticipate, since banks were subject to strict regulations and projected an image of security and risk control. A more strict regulation was developed; in this way, the Basel Committee applied a set of measures, between 2012 and 2019, for the management of systematic risk in the European banks [1]. The causes of such severe crisis were economic, and ethical; in this sense, we can consider individual moral failures, ethical failure related to management or governance, and social ethics failure [2]
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