Group 2

Updated Research: Real Economy – Real Returns: The Business Case for Values-based Banking (2018)


20 January 2019

Since the financial crisis, a group of values-based banks and banking cooperatives (VBBs) have demonstrated that a holistic focus on the real economy[1] with a dedication to supporting economic, social and environmental impact delivers steady financial returns. These entities,  all members of the Global Alliance for Banking on Values (GABV) operate in numerous markets, serve diverse needs, use distinct business models but share a common strategic foundation: the Principles of Values-based Banking.

The call for change is echoed in a variety of initiatives as well as analysis that highlight the need to move beyond a narrow shareholder focus to a holistic stakeholder approach for our economy. Academic research[2] highlighted in The Economist[3] last November shows that corporations with a focus beyond accounting profits often deliver higher returns and have lower costs of capital. The need for radical rethinking of our economic models is supported by a variety of other studies well summarised in recent commentaries by Martin Wolf in the Financial Times[4] and David Brooks in the New York Times[5].

The recent launch of the Principles of Responsible Banking by UNEP FI[6] indicates growing interest in values-based banking by a broader group of banks. This initiative is a positive development, especially with the commitment to identify, assess and improve the impact on people and environment resulting from their activities, products and services[7]. However, greater focus on the real economy would be an improvement in these principles.

VBBs have constantly shown that serving the real economy delivers better and more stable financial returns than those shown by the largest banks in the world. These VBBs address the very real banking needs, especially access to credit, of enterprises and individuals within their communities. The success of this banking approach is verified by independent research[8].

Since 2012 the GABV has published research comparing the results of VBBs with the largest banks in the world, the Global Systemically Important Banks (GSIBs)[9],[10]. This research originally looked at financial results through year-end 2010 and is now updated through year-end 2017. It is striking that with the crisis now several years behind us, the conclusions fundamentally remain the same.

Read the whole report below and download here.




[1] The real economy relates to economic activities that generate goods and services as opposed to a financial economy that is concerned exclusively with activities in the financial markets.

[2] “Corporate Sustainability: First Evidence on Materiality” by Mozaffar Khan, George Serafeim, and Aaron Yoon in The Accounting Review 91 (6): 1697-1724. An earlier version of the paper is available at; Luigi Zingales, Does Finance Benefit Society (

[3] “Working for purpose”, Bartleby, The Economist, 18 November 2018.

[4] “We must rethink the purpose of the corporation,” Martin Wolf, Financial Times, 11 December 2018

[5] “The Remoralization of the Market,” David Brooks, The New York Times, 10 January 2019.

[6] The draft Principles of Responsible Banking were released in November 2018 and are open for comment until 29 March 2019.

[7] Details on the approach can be found in the Implementation Manual for the Principles of Responsible Banking relative to Principle 2.

[8] How Banks Profit by Rethinking Their Business published by FSG ( The Effect of Ethics on Banks’ Financial Results, Radek Halamka and Petr Teply (

[9] Learn more at the Financial Stability website (

[10] Listing of VBBs and GSIB Peer Groups can be found in Appendix 2.

Related content