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Simon Cornée and Ariane Szafarz
''How Costly is Social Screening? Evidence from the Banking Industry''
( 2018, Vol. 38 No.1 )
Social banks screen loan applicants by using both social and financial criteria, and social screening implies an extra workload. To check the costs involved in this type of screening we use balance-sheet information on European banks, and compare the operating costs of social banks with those of other banks. Surprisingly, our first results suggest that social banks' costs are not significantly higher than those of their mainstream counterparts. Next, we uncover that the extra costs of social screening are offset by a cheaper workforce. Despite their need for specific screening, social banks are financially sustainable in a market dominated by for-profit institutions.
Keywords: Social Screening, Social Banks, Screening Costs, Warm Glow
JEL: G2 - Financial Institutions and Services: General
L3 - Nonprofit Organizations and Public Enterprise: General
Manuscript Received : Jan 24 2018 Manuscript Accepted : Mar 23 2018

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