The Embeddedness of Ethical Banks in the UK

Daniel Tischer

Research output: Book/ReportCommissioned report


The Embeddedness of Ethical Banking in the UK2012Following the financial crisis that began in 2007, various groups and individuals demanded an ecologically diverse banking sector to help spread risk in the banking industry and to more effectively cater to customer needs. To date, however, measures to change retail banking have been limited to modest structural and incentive adjustments to boost competition and modify the banking culture which prompts an investigation about the nature of the ethical banking sector and its ability to grow and thrive.The lack of progress in reforming banking in the UK raises questions of whether and how we could encourage and sustain ethical, social and non-profit alternatives to current high street banks. Because prior academic research in ethical has been limited, the research aims to fill gaps with regards to understanding the network established between ethical banks their business models and to identify the type of intervention needed to promote ethical banking as an alternative to established mainstream retail banking.The research presented in this thesis investigates how the ethical banking sector isembedded in the UK financial services industry and draws out political-economic dynamics that facilitate as well as hinder the development of the sector. To this end, the thesis develops a conceptual framework that draws on literatures on industrial districts and embeddedness. The thesis also models and analyses the ethical banking network using social network analysis, before developing an understanding of ethical banks’ business models and how the sector is organised within the banking industry. Data on the banks’ relationships with other organisations were gathered through questionnaires, and interviews were conducted with respondent firms to explore ethical banking as a sector from the perspective of ethical banks themselves. In addition, company, industry and legislative publications have been analysed to add context and validate findings.At the broadest level, the results draw a picture of ethical banking as a diverse butdisorganised subsector which is dominated by two players and lacks prospects to develop into an alternative banking sector that could compete with the full banking services offered by high street competition. Only if the sector manages to reorganise itself internally with support from external players could it form a more coherent and centralised subsector with a clear and shared understanding as to what its ambitions are. Thus the research highlights the potential of ethical banking which is expanding rapidly, but, at the same time, the research also raises the difficulties in developing ethical banking as a sector which retains its distinctiveness from high street banks.In sum, the research findings are in line with current ambitions to develop and promote a more diverse and sustainable UK banking industry: ethical banks should receive more attention from policy makers as they are a set of diverse actors that has grown significantly since the beginning of the financial crisis and, could if strengthened, contribute to developing a stronger retail banking sector more responsive to customer needs. Government efforts to reorganise banking should include developing ethical banking as an alternative to Plc retail banks which would change competition by increasing consumer choice instead of creating yet more large scale banks.
Original languageEnglish
Place of PublicationUnited Kingdom
PublisherManchester: University of Manchester
Publication statusPublished - 1 Apr 2013


  • Ethical Bank, Social Bank, Building Societies, Business Model, Social Network, Policy


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