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Book part
Publication date: 2 September 2019

Sarah Lenz and Sighard Neckel

German ethical banks have experienced a significant increase in customers, deposits, and lending. They aim to establish a fairer banking system. But the simultaneous pursuit of…

Abstract

German ethical banks have experienced a significant increase in customers, deposits, and lending. They aim to establish a fairer banking system. But the simultaneous pursuit of social, ecological, and economic goals leaves them vulnerable to conflicting orders of worth. The authors examine the normative foundations that ethical bank employees refer to when they describe their everyday practices and identify the specific problems that arise from negotiating between moral principles and economic demands to provide insights into the impacts, constraints, and paradoxes of normatively oriented business practices. Drawing on the theoretical framework of the sociology of critique, the authors assume that moral categories, social processes of interpretation, and justification are an essential part of markets. Ethical banking is characterized by the need to meet both market-limiting and market-expanding requirements, and this particularly becomes contentious when dealing with economic growth. By analyzing ethical banks’ freely accessible documents, the authors first outline the institutional guidelines. In a second step, the authors analyze 27 qualitative interviews with employees of ethical banks to gain insights into everyday lending practices and action-guiding normative orientations. The goal of this chapter is to examine the tensions that may arise from applying normative guidelines under the condition of increasing economic requirements and to disclose the way that ethical banks negotiate between mechanisms of expansion and limitation. The analysis of this chapter points out a paradox of ethical banking: due to the banks’ economic expansion, investments corresponding to their ethical commitments tend to become a luxury they cannot afford.

Book part
Publication date: 24 March 2021

Jason Spicer and Christa R. Lee-Chuvala

Alternative enterprises – organizations that operate as a business while still also being driven by a social purpose – are sometimes owned by workers or other stakeholders, rather…

Abstract

Alternative enterprises – organizations that operate as a business while still also being driven by a social purpose – are sometimes owned by workers or other stakeholders, rather than shareholders. What role does ownership play in enabling alternative enterprises to prioritize substantively rational organizational values, like environmental sustainability and social equity, over instrumentally rational ones, like profit maximization? We situate this question at the intersection of research on: (1) stakeholder governance and mission drift in both hybrid and collectivist-democratic organizations; and (2) varieties of ownership of enterprise. Though these literatures suggest that ownership affects the ability of alternative enterprises to maintain their social missions, the precise nature of this relationship remains under-theorized. Using the case of a global, social, and environmental values-based banking network, we suggest that alternative ownership is likely a necessary, but not sufficient, condition to combat mission drift in enterprises that have a legal owner. A supermajority of this network’s banks deploy alternative ownership structures; those operating with these structures are disproportionately associated with social movements, which imprint their values onto the banks. We show how alternative ownership acts through specific mechanisms to sustain enterprises’ missions, and we also trace how many of these mechanisms are endogenous to alternative ownership models. Finally, we find that ownership models vary in how well they enable the expression and maintenance of these social values. A ladder of mission-sustaining ownership models exists, whereby the dominance of substantive, non-instrumental values over operations and investment becomes increasingly robust as one moves up the rungs from mission-driven investor ownership to special shareholder and member-ownership models.

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Organizational Imaginaries: Tempering Capitalism and Tending to Communities through Cooperatives and Collectivist Democracy
Type: Book
ISBN: 978-1-83867-989-7

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Book part
Publication date: 20 May 2019

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Research in Corporate and Shari’ah Governance in the Muslim World: Theory and Practice
Type: Book
ISBN: 978-1-78973-007-4

Book part
Publication date: 20 January 2022

M. Kabir Hassan, Aishath Muneeza and Adel M. Sarea

This chapter explores the impact of the pandemic on Islamic commercial finance and Islamic social finance in a comprehensive manner. The chapter reveals that COVID-19 has provided…

Abstract

This chapter explores the impact of the pandemic on Islamic commercial finance and Islamic social finance in a comprehensive manner. The chapter reveals that COVID-19 has provided more opportunities to Islamic social finance than Islamic commercial finance. The beauty of Islamic finance in this regard is reflected as the perception that Islamic finance does not achieve its objective as being a social finance is proved to be false as Islamic finance not only promotes profit maximization, but it has also the potential to achieve social objectives. Islamic commercial finance developments could be slower, but it is anticipated that Islamic social modes of financing will be used widely even by multilateral agencies to assist the communities who need help in this pandemic. The most important lesson one could learn from this pandemic in relation to Islamic finance is that Islamic finance is truly different from conventional finance and as such, it needs a unique legal, regulatory and governance framework to display the true potential of it.

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Towards a Post-Covid Global Financial System
Type: Book
ISBN: 978-1-80071-625-4

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Book part
Publication date: 9 November 2009

Roberto Moro Visconti

The global recession has strongly affected the credibility of the international banking system, damaging also the real economy.Developing countries, not fully integrated with…

Abstract

The global recession has strongly affected the credibility of the international banking system, damaging also the real economy.

Developing countries, not fully integrated with international markets, seem less affected and local microfinance institutions might also allow for a further shelter against recession, even if foreign support is slowing down and collection of international capital is harder and more expensive.

Intrinsic characteristics of microfinance, such as closeness to the borrowers, limited risk and exposure and little if any correlation with international markets have an anti-cyclical effect. In hard and confused times, it pays to be little, flexible and simple.

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Credit, Currency, or Derivatives: Instruments of Global Financial Stability Or crisis?
Type: Book
ISBN: 978-1-84950-601-4

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Book part
Publication date: 1 May 2018

Emmanuel Mogaji

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Emotional Appeals in Advertising Banking Services
Type: Book
ISBN: 978-1-78756-302-5

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Responsible Investment Around the World: Finance after the Great Reset
Type: Book
ISBN: 978-1-80382-851-0

Book part
Publication date: 1 September 2008

Rebecca Lawrence

This chapter analyses the private financial sector's policy responses, lending practices and various forms of engagement with non-governmental organisations (NGOs), communities…

Abstract

This chapter analyses the private financial sector's policy responses, lending practices and various forms of engagement with non-governmental organisations (NGOs), communities and institutional clients involved in controversial commodity industries. The chapter demonstrates that secrecy plays a constitutive role in this engagement. For investment banks, client-confidentiality is the ultimate limit to transparency. At the same time, NGOs campaign to make public and reveal links between investment banks and clients in commodity industries. The chapter also explores techniques within the financial sector for the assessment of social and environmental risk. The chapter argues that these techniques combine both practices of uncertainty and practices of risk. For civil society organisations, NGOs and local communities, these techniques remain problematic, and various campaigns question both the robustness of the financial sector's social risk screening methods as well as the sustainability of the investments themselves.

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Hidden Hands in the Market: Ethnographies of Fair Trade, Ethical Consumption, and Corporate Social Responsibility
Type: Book
ISBN: 978-1-84855-059-9

Book part
Publication date: 1 October 2015

James E. McNulty and Aigbe Akhigbe

Directors help determine the strategic direction of a corporation and are responsible for ensuring the institution has a good system of internal control. Banking institutions…

Abstract

Directors help determine the strategic direction of a corporation and are responsible for ensuring the institution has a good system of internal control. Banking institutions without a strategic direction emphasizing sound lending practices that promote the long-run financial health and viability of the institution will be sued more frequently than peer institutions. Institutions that do not have a good system of internal control will also be sued more frequently. Hence, legal expense is a bank corporate governance measure. We compare the performance of bank legal expense and a widely cited corporate governance index in a regression framework to determine which better predicts bank performance. The regressions indicate legal expense is a much better predictor, hence a better measure of bank corporate governance. Regulators should require legal expense reporting and rank institutions by the ratio of legal expense to assets to help identify institutions with weak governance. Seven case studies illustrate the role of legal expense in corporate governance.

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International Corporate Governance
Type: Book
ISBN: 978-1-78560-355-6

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Book part
Publication date: 1 March 2021

Siti Khomsatun, Hilda Rossieta, Fitriany Fitriany and Mustafa Edwin Nasution

The unique characteristic of Islamic bank leads in governance and disclosure. Using stakeholder, signaling, and market discipline theory, governance and adequate disclosure may…

Abstract

The unique characteristic of Islamic bank leads in governance and disclosure. Using stakeholder, signaling, and market discipline theory, governance and adequate disclosure may increase bank soundness. This study aims to investigate the relationship of sharia disclosure and Sharia Supervisory Board in influencing Islamic bank soundness in the different regulatory framework of the country. Using purposive sampling, the research covered 84 Islamic banks in 16 countries during the period 2013–2015 with lag data of Islamic bank soundness. The result shows sharia disclosure influences on Islamic bank soundness for management efficiency, capital adequacy ratio, asset quality, and liquidity. The results also show that sharia disclosure mediates the indirect effect of SSB on Islamic bank soundness. The regulatory framework (sharia accounting standard and SSB regulation) shows moderating effect of regulation framework proved on the association of sharia disclosure with management efficiency, capital, and liquidity. The effect is indirectly depending on the regulatory framework for proxy management efficiency, capital, and liquidity. The implication of the research suggests that sharia disclosure could increase the market discipline mechanism of Islamic bank stream. The Islamic bank can increase the transparency using sharia disclosure as a branding for increasing public trust, even though in the deficient Islamic bank regulation countries.

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Recent Developments in Asian Economics International Symposia in Economic Theory and Econometrics
Type: Book
ISBN: 978-1-83867-359-8

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1 – 10 of over 3000