University of Twente Student Theses


A shift towards purpose-driven banking and its performance implications

Boerman, D.A. (2022) A shift towards purpose-driven banking and its performance implications.

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Abstract:This thesis aims to research the complex concept of purpose-driven banking; an alternative to the traditional shareholder-oriented approach to banking. We are in an era where purpose and value become core reasons for doing business. From different perspectives, the need for purposeful organizations, including banks, continuous to rise. While various literature studies have examined purpose-driven businesses, the manifestation of purpose in organizations is frequently ambiguous and the implications are unclear, especially in the banking sector. Hence, in this thesis we increase understanding on the concept of purpose-driven banking and its main components, and provide insight in the financial performance implications of embedding a purpose-driven business model. We conduct an extensive literature review to broaden understanding on the topic. Specifically, we investigate how purpose is manifested in banks, and find the main characteristics that describe purpose-driven banks. We use this knowledge to construct a comprehensive classification tool that distinguishes purpose-driven banks from non-purpose-driven banks. We apply the framework to a sample of 60 banks, resulting in a classification of 15 purpose-driven banks and 45 non-purpose-driven banks. We then conduct a comparative analysis to learn about the differences in financial performance implications between the two banking groups. The outcomes of the analysis suggest a significant difference between the two banking groups with regard to the tier 1 ratio. This result suggests that purpose-driven banks have a better risk profile than non-purpose-driven banks.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Industrial Engineering and Management MSc (60029)
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