Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/209930 
Year of Publication: 
2009
Series/Report no.: 
Working Paper No. 2009/14
Publisher: 
Norges Bank, Oslo
Abstract: 
Stakeholder oriented governance systems are often thought to hamper efficiency. We show that social capital improves the viability of stakeholder-oriented firms 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. We propose that social capital facilitates collective decision-making, ensuring that banks internalize the preferences of the community in return for continued community patronage. Consistently, we find that in high social capital areas banks operate with lower interest rate margins, lower returns on assets, and lower loan losses.
Subjects: 
stakeholder governance
social capital
nonprofit firms
corporate governance
financial intermediation
JEL: 
Z13
P13
G34
G21
Persistent Identifier of the first edition: 
ISBN: 
978-82-7553-511-3
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper
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