Journal Article

Social Capital and the Viability of Stakeholder-Oriented Firms: Evidence from Savings Banks

Charlotte Ostergaard, Ibolya Schindele and Bent Vale

in Review of Finance

Volume 20, issue 5, pages 1673-1718
Published in print August 2016 | ISSN: 1572-3097
Published online October 2015 | e-ISSN: 1573-692X | DOI: https://dx.doi.org/10.1093/rof/rfv047
Social Capital and the Viability of Stakeholder-Oriented Firms: Evidence from Savings Banks

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  • Capitalist Systems
  • Economic Sociology
  • Banking
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We show that social capital improves the viability of stakeholder-oriented firms operating in competitive markets. Studying exits from the population of Norwegian savings banks after deregulations, we find that banks located in communities with high social capital have a higher probability of survival, but no similar effect exists for commercial banks. Norwegian savings banks are collectively governed by their stakeholders and we provide evidence that social capital improves the efficiency of stakeholder governance. In high social capital areas, banks raise more deposits locally, distribute more of their surplus for altruistic purposes, and operate more locally focused branch networks.

Keywords: P13; Z13; G21; G30

Journal Article.  20807 words.  Illustrated.

Subjects: Capitalist Systems ; Economic Sociology ; Banking ; Corporate Governance

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