The Social Efficiency for Sustainability: European Cooperative Banking Analysis

Leire San-Jose,Eric Lamarque,Jose Retolaza

doi:10.3390/su10093271

Abstract

This paper seeks to establish the relationship between economic efficiency and social efficiency to analyze the sustainability of banking in Europe. The type-effect has been analyzed, as stakeholder value banks—cooperatives and saving banks—should not be less socially and economically efficient than commercial banks. This European analysis was made using the Bankscope database, as it provides a unique insight into the stakeholder view that clarifies, by an analysis of two-stage boundaries, that there is no single model of social and economic efficiency according to the type of financial entity in Europe. These findings contribute to the social cost paradox and shared value perspective, and more broadly to stakeholder theory. It is established that a tradeoff between economic and social efficiency is not needed. There are different behaviors in different European countries. Moreover, our results could lead to the development of social indicators of the sustainability aspects of organizations without resorting to traditional accounting.

Highlights

The situation of financial institutions is changing: regulation, governance, digitalization, and supervision are aspects that make banks change
This paper contains two levels of analysis: the first considers the overall social and economic efficiency of a European country, whilst the second is applied to specific aspects that could shed some light on the differences detected
Economic efficiency has been selected using a ratio of economic performance; the intention is to provide a general analysis and consensus for economic aspects of financial institutions

Summary

Introduction

The situation of financial institutions is changing: regulation, governance, digitalization, and supervision are aspects that make banks change. The efficiency of banks is one of the measures used to organize this sector, and if this measure is developed to achieve sustainability it will be marked a management line towards the purpose of sustainability of financial institutions, doing well and doing good for all stakeholders. It has applied bank efficiency from a general economic perspective, but for the purpose of this analysis, new, more social and sustainable aspects have been considered. This paper will pay attention to them and use them to show a different view of the sustainability approach in banking

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Conclusion