Leire San-Jose

Empirical evidence of banking relationships for Spanish SMEs

Theoretical papers on banking relationships have focused on how the strength of a bank—firm relationship affects the design of credit agreements. In empirical studies, the number of bank relationships has been often used as a proxy for the strength of the bank—firm relationship. Any analysis of bank—firm relationships must also include a study of the reasons why a particular bank is selected. This means identifying the most significant decision-making variables concerned with such contracting. In this article, we examine the determinants of the number of banking relationships and the factors that influence the choice of banks in a sample of small and medium-sized firms. The reference to SME firms is very useful, since SMEs are highly dependent on banking finance to undertake their projects. The results provide some evidence in support of the idea that, for SMEs, the size of the firm, age, leverage and financial cost have significant links with the number of banking relationships. On the other hand, the results confirm the tendency for qualitative aspects to become determining factors in the choice of financial institutions.

Ontological Stakeholder View: An Innovative Proposition

This article describes a theoretical way of understanding business enterprise, for what it is used the stakeholder theory as a theory of the firm. Thus, the purpose of this article is to show an innovative perspective called ontological perspective of stakeholders that relies on a phenomenological model where the subjective perspective of agents is the key, from a purely monetarist model to an economic, social and emotional value creation model, and from a deductive model of stakeholder interests to an inductive model. The main contributions are: add a new perspective to the different classifications made of stakeholder theory, avoid monetarist reductionism under the concept of value in a way that the manager takes into account all interconnected interests of stakeholders, and finally prioritize interests map instead of roles map without accepting the assumption that the role involves joint and no conflicting interests.

Treasury Management Versus Cash Management

Using a database of Spanish companies, this paper analyses the treasury management responsibilities assumed by financial departments and develops a model to confirm those responsibilities. We have developed an explanatory model that brings together the main functions of the treasurer by means of two concepts: (i) basic cash management, which groups the management of collections and payments, liquidity monitoring in banking operations, short-term treasury forecasts, the management of banking balances on value date and negotiation with financial organizations; and (ii) advanced cash management, which includes the management of the financing of treasury deficits, the management of the positioning of treasury peaks and the management of financial risks. In this way, the definition of cash management is empirically corroborated.

Ethical Banks: An Alternative in the Financial Crisis

This paper studies the differences between traditional financial intermediaries (commercial banks, saving banks and credit cooperatives) and ethical banks that focus on positive social and ethical values. The credit crisis calls into question the functionality and good performance of traditional banks. The full incorporation of ethical values and principles by traditional financial intermediaries might be a form to solve their misleading financial situation. We have analyzed four factors that theoretically mean ethical differences: information transparency, placement of assets, guarantees and participation. These four factors are grouped in an index called Radical Affinity Index (RAI). The paper is focused on the study of RAI using a sample of 120 European banks. The evidence shows, that transparency of information and placement of assets are factors that differentiate ethical banks and the rest of financial intermediaries. The guarantees and participation, which seemed to be useful factors to differentiate ethical aspects of banks, do not support clear evidence to the analysis. In sum, RAI is a functional and useful index to show the ethical policy of financial intermediaries.

Legitimizing and Delegitimizing Factors of Firms in Society: Is It a Problem of Communication or Strategic? An Approach Based on the Distributed Social Value as the Key Factor for the Organizations’ Social Legitimacy

There is an increasing concern about the value contributed by firms to the society as a whole. Transnational companies are particularly being questioned; therefore, legitimation for this kind of corporations is demanded. This chapter analyses four delegitimizing factors: negative added value, negative equity, tax evasion and moral hazard associated to potential situations of bankruptcy. Three legitimizing factors will also be analysed: added value distributed to stakeholders, value distributed by “non-market” mechanisms and emotional value generated to different stakeholders of the entity. Since the lack of legitimation affects large companies to a greater degree, two hypotheses related to the size of the firms have been tested. The first has to do with a larger presence of delegitimizing factors in large firms. The second analyses a smaller distribution in this sort of firms of value generated to stakeholders that are not shareholders assessed by means of the social efficiency ratio (SER). The obtained results allow for identifying whether the criticism towards large firms is supported by objective factors (confirmed hypothesis) or subjective ones (rejected hypothesis) and consequently whether the transnational companies should base their action plans of social legitimation on strategy or on communication.

Are Islamic banks different? The application of the Radical Affinity Index

The purpose of this paper is to extend the literature on Islamic banking by examining their ethical dimension using transparency, placement of assets, guarantees and participation from Radical Affinity Index.,To this end, a sample of 20 Islamic banks from 13 countries (Bahrain, Saudi Arabia, Malaysia, Pakistan, Kuwait, Tanzania, Great Britain, Oman, Iraq, Egypt, Bangladesh and Qatar) was used.,The results are robust to ethical effects. The evidence suggests that among Islamic banks, at least some of them could improve their ethical requirements of the Sharia; they obtained lower scores than ethical banks in terms of RAI variables (transparency, placement of assets, guarantees and participation).,It is used a random sample rather than population with the limitations that entails. The variables in the index are based on ethical perspective; then, the index is applied in Islamic banking but with the ethical view limitation.,The Islamic banks have the option to increase their transparency including further information regarding the beneficiaries of the benevolent funds; moreover, it would offer a clearer view about their ethical and social commitment towards society.,Additionally, this paper broadens the scope of the literature by analysing the determinants of Islamic banking around ethical dimensions of financial entities.

Process Model Analysis and Calculation: Spoly

This chapter develops the process of calculating the monetary value of social value based on the “Polyhedral Model”, which consists of six steps. In step one the process begins with the identification of the working team and the setting of the timetable. Step two involves work on the strategic and management documents of the organization, ending with the preparation of a consensus-based stakeholder map. Step three focuses on identifying the value variables perceived by stakeholders, mainly through phenomenological interviews, and ends with the preparation of the Value Variables Matrix (VVM) for the organization. Step four identifies the outputs generated by the organization for each value variable and seeks potential proxies which, after a process of fuzzy calculation, enable reference values to be identified for the respective outputs. Step five entails the quantification of the calculations as per the “Polyhedral Model”, making it possible to see the value generated for each stakeholder, the shared value and the consolidated value in numerical and graphic forms. The sixth and final step is a review of the whole process and the proposal of improvements for the next calculation cycle, which generally coincides with the next financial year.

Literature Review: Previous Methodologies

This chapter classifies and analyzes the main methods currently in use for quantifying the social value generated by organizations. As an aid in classification, they are grouped under five main headings: Impact Analysis, Assessment of externalities, Monetary Valuation, Management Improvements, and Rating Systems. An in-depth analysis is then conducted of the techniques of monetary valuation, and specifically of its common basis in the form of cost-benefit analysis. Two main groups are distinguished: one centered on the reduction of inputs and the other on the maximizing of outputs. In the latter a distinction is drawn between those that refer to past outputs (trading) and to future outputs (investment). Part two examines the differences between SROI as a method for analyzing return on investment and the synchronous methods of monetization of value. The essential difference is that the former operates on a set of years in which returns on investment take place and the latter focuses on the data for a past period, normally the financial year. An in-depth examination is also made of the limitations of using SROI to quantify social value generated in the past.

Main Problem in Displaying the Social Value Generated by Organizations

The main problem is that we only look systematically at the financial value created or destroyed by firms, since conventional accounting is only concerned with reflecting value for shareholders. We do not currently have instruments that provide us with an intersubjective view of the value generated or subtracted by organizations for their stakeholders as a whole; that value is not just financial but also social, environmental and emotional at least. Any proposed solution must be based on a new discourse of business as a community of stakeholders who share resources and risks to generate value, and must therefore distribute the resulting value among themselves in a balanced fashion. To that end it is necessary to develop social accounting for stakeholders and to properly standardize it so that progress can be made towards a comprehensive, intersubjective framework or value generated and distributed.

Background: Social Role of Companies and Success Indicators

The basic function of any organization, i.e. that which legitimizes it socially, is to create value for society as a whole; however concern for the economic and financial factors involved in all trading activities has resulted in the development of accounting focused on these instrumental issues. The successful development of this accounting has led to results concerned with the actual purpose of organizations being relegated or overshadowed. This chapter analyses the different theories that make economic results a good indicator or social value: transaction cost theory, contract theory, agency theory, etc. These are contrasted with a system-based outlook taken from stakeholder theory, seen as a more suitable paradigm for understanding the inherent nature of organizations and their consequent function in society. Finally, the main indicators being developed are reviewed in an attempt to visualize the social value generated fundamentally by companies.