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Prospective Innovation at Ethical Banking and Finance

Vol:0, №:0, Year:2013

Socially Responsible Finance and Socially Responsible Banking as New Phenomena in Financial Theory – A Systematic Classification and Explanation

Gregor M. Krämer
Faculty of Business Management - Alanus University
Germany

Abstract
Socially Responsible Finance (SRF) and Socially Responsible Banks (SRBs) are relatively new phenomena which could be observed in financial markets during the last years. SRBs registered an enormous increase in customers during the financial crisis, and in the financial markets a wide range of new products originated – reaching from microfinance to sustainable investment funds through to peer-to-peer lending – some of which already have become established in financial markets. Best known is probably the concept of Socially Responsible Investment (SRI) which, however, covers only a small part of SRF. Until now, there is neither a uniform definition of the terms SRF and SRB nor does a theoretical foundation, explanation, or systematic classification of these phenomena exist. In contrast to the classic concepts which put an emphasis on profit maximisation, SRF and SRB can be characterised by the fact that they consider ecological and social sustainability as at least equivalent to economic sustainability. In this paper, these specific characteristics will be integrated at different places into the traditional model of a financial system thus not only classifying these new occurrences but also trying to give an explanation for their existence.

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Key words
Banks, Financial Intermediation, Financial Products, Financial Services, Financial System, Islamic Finance, Micro-Finance, Non-bank Financial Institutions, Regional Currencies, Sustainability, Socially Responsible Banking, Socially Responsible Finance

Citation
Gregor Krämer (2013), Socially Responsible Finance and Socially Responsible Banking as New Phenomena in Financial Theory – A Systematic Classification and Explanation in Leire San-Jose, Jose Luis Retolaza (eds.) Prospective Innovation at Ethical Banking and Finance (Studies in Philosophy, Law and Economics), - Sumy: Vinnychenko M.D., pp.148-162. Available at http://taadler.com/a43

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