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

Forthcoming in Review of Finance

53 Pages Posted: 15 Aug 2015

See all articles by Charlotte Ostergaard

Charlotte Ostergaard

BI Norwegian Business School, Department of Finance; European Corporate Governance Institute (ECGI)

Ibolya Schindele

Central European University; Central Bank of Hungary

Bent Vale

Norges Bank (Central bank of Norway)

Date Written: August 12, 2015

Abstract

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: Social Capital, Stakeholder Governance, Non-profit firms,Corporate Governance, Financial Intermediation, Savings Banks.

JEL Classification: P13, Z13, G21, G30.

Suggested Citation

Ostergaard, Charlotte and Schindele, Ibolya and Vale, Bent, Social Capital and the Viability of Stakeholder-Oriented Firms: Evidence from Savings Banks (August 12, 2015). Forthcoming in Review of Finance, Available at SSRN: https://ssrn.com/abstract=2643033

Charlotte Ostergaard (Contact Author)

BI Norwegian Business School, Department of Finance ( email )

Nydalsveien 37
Oslo, 0442
Norway
+4746410520 (Phone)

HOME PAGE: http://home.bi.no/charlotte.ostergaard/

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Ibolya Schindele

Central European University ( email )

Quellenstraße 51
Vienna, 1100
Hungary

HOME PAGE: http://economics.ceu.edu/

Central Bank of Hungary ( email )

Szabadság tér 9.
Budapest, 1054
Hungary

HOME PAGE: http://www.mnb.hu/web/en

Bent Vale

Norges Bank (Central bank of Norway) ( email )

Bankplassen 2
P.O. Box 1179
Oslo, N-0107
Norway
+47 22 31 66 74 (Phone)
+47 22 42 40 62 (Fax)

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