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

Charlotte Ostergaard, Ibolya Schindele, Bent Vale

Research output: Contribution to journalArticlepeer-review

Abstract (may include machine translation)

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.

Original languageEnglish
Pages (from-to)1673-1718
Number of pages46
JournalReview of Finance
Volume20
Issue number5
DOIs
StatePublished - Aug 2016
Externally publishedYes

Keywords

  • G21
  • G30
  • P13
  • Z13

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