UNKNOWN SOCIAL BANKING: EVIDENCE FROM CENTRAL EUROPEAN COUNTRIES

Traditionally, the social effect of banking activity is associated with microfinance. This stream line is started from the 70th of the XX century, when microfinance became the tool of the private entrepreneurship development in Bangladesh due to Grameen Bank lending. At times, the "narrow" social banking, focused on poverty reduction, transformed to the "broad" theory of social banking, which covers so-called ESG factors: ecology, social aspects, governance, including anticorruption, corporate culture, etc. In our paper, we look at social banking wider than microfinance but narrower than the "broad" meaning, focused on the pure social effect of lending. We assumed that banks’ lending should somehow affect social indicators. As a driver factor, we took loans to households and studied their impact on unemployment, households' deposits, volume of private payments, and the level of poverty. The database is the Eurostat and ECB dataset on 6 Central European countries for roughly 20 years. In all 6 countries studied, a clear direct relationship was found between the volume of loans granted to households, on the one hand, and their deposits in banks, also the volume of payments of the population, and the inverse relationship between such loans and the level of unemployment and poverty of the population, which means a positive effect on all these indicators. To provide deeper analyses, we propose the model of the universal social taxonomy toolkit. Based on it, it will be possible to compile data on various credit and investment projects and calculate the social effect in terms of sectors of the economy, countries, and regions. Based on such a taxonomy, it is possible to introduce a certain rating assessment of the social effect of credits and investments and stimulate socially friendly financial projects.