Designing a Social Banking Model to Reduce Conflict of Financial Interest between Banks and Manufacturing Firms through Agent-Based Modeling Simulation

Document Type : Review paper


1 Department of Management and Economics, Islamic Azad University Science and Research Branch, Tehran, Iran

2 Department of Industrial Management, Faculty of Management, Semnan Branch, Islamic Azad University, Semnan, Iran.



Known as financial intermediaries, banks should direct capital toward different projects and industries in a bid to play a positive role in the sustainable development of society and fulfill their social responsibilities. However, the design frameworks of Iran’s banking business models have failed to simultaneously provide financial interests for firms and banks. Despite the analysis of the agents affecting the liquidity problems of manufacturing firms, the literature has nearly neglected the conflict of financial interest between banks and those firms. Hence, this study aims to design and simulate a social banking model based on agent-based modeling to reduce the conflict of financial interest between banks and manufacturing firms. The social banking model was simulated in NetLogo for Resalat Qard–al-Hasan Bank of Iran, selected due to its leading role in providing inexpensive microfinance services to develop social entrepreneurship without expecting dividends. The proposed model pursues the cash flow and other important financial parameters related to firms, the bank, clients, and Iran's state during the 2017–2022 period. Tested, implemented, and analyzed in multiple simulation intervals, the results indicated changes in the parameters in response to developments based on social banking implementation.


Abili, I. D. (2018). Development finance interventions of the Central Bank of Nigeria in agriculture. International Journal of Advanced Studies in Economics and Public Sector Management
Azizi S. Conceptual Mapping of Retail Banking: A Correspondence Analysis Approach. Journal of New Research in Decision-Making. 2016;1(3
Albadvi, A. Implement an open innovation approach in innovation development Challenges, Considerations and Solutions; The banking and payment industries case study. Management Research in Iran, 2019. 23(2): p. 200-225.
Benedikter, R. (2011). Social banking and social finance. In Social banking and social finance (pp. 1-128).

Bigdeli, A., Abdolvand, M. A., Heidarzadeh, K., & Khoun Siavash, M. (2021). CSR Branding Model in Iran Banking Industry based on Structural Equation Modeling with the Focus on Brand Social Identity. Iranian journal of management sciences, 16(61), 85-115
Bo¨lw. (2016). Umsatz mit Bio-Lebensmitteln in Deutschland in den Jahren 2000 bis 2016 (in Milliarden Euro). https://de.statista. com/statistik/daten/studie/4109/umfrage/bio-lebensmittelumsatz-zeitreihe/. Accessed 18 Feb 2017.
Clerck, F. D. (2009). Ethical banking. In Ethical prospects (pp. 209-227). Springer, Dordrecht.‏
Cornée, S. (2019). The relevance of soft information for predicting small business credit default: Evidence from a social bank. Journal of Small Business Management57(3), 699-719
Crotty, J. (2008). "Structural Flaws in Deregulated Financial Markets Caused the Current Crisis: A Critical Evaluation of the New Financial Architecture", PERI.
Cornée, S., & Szafarz, A. (2014). Vive la Différence: Social Banks and Reciprocity in the Credit Market. Journal of Business Ethics, 125(3), 361- 380
Defourny, J. (2001). From Third Sector to Social enterprise. The Emergence of Social Enterprise
Dorfleitner, G., & Utz, S. (2014). Profiling German-speaking socially responsible investors. Qualitative Research in Financial Markets, 6(2), 118–156.
Ghisetti, C., Mancinelli, S., Mazzanti, M., & Zoli, M. (2017). Financial barriers and environmental innovations: evidence from EU manufacturing firms. Climate Policy, 17(sup1), S131-S147
Gilbert N. (2008). Agent-Based Models. Sage Publication.
Guene, C., & Mayo, E. (Eds.). (2001). Banking and Social Cohesion: Alternative Responses to a Global Market. Jon Carpenter Publishing.
Hamidi, M.L. and A.C. Worthington, Islamic Social Banking: The Way Forward Perbankan Sosial Islam: Langkah Kehadapan? Jurnal Ekonomi Malaysia, 2018. 52(1): p. 195-20
Huybrechts, B. and A. Nicholls, Social entrepreneurship: definitions, drivers and challenges, in Social entrepreneurship and social business. 2012, Springer. p. 31-48.
Isidore, C. (2013). Bank of America in $10 billion settlement with Fannie Mae. CNN Money
Jager W.(2000) Modeling consumer behavior. Ph.D. thesis. Groningen University.
Karimi, H. (2022). A sustainable financial model for the social banking business. Financial Research Journal
Kaya, E., & Kadanalı, E. (2021). The nexus between agricultural production and agricultural loans for banking sector groups in The Central Bank of Iran (CBI)-
Krause, K., & Battenfeld, D. (2019). Coming out of the niche? Social banking in Germany: An empirical analysis of consumer characteristics and market size. Journal of business ethics155(3), 889-911.‏
Kumar, K., & Prakash, A. (2018). Developing a framework for assessing sustainable banking performance of the Indian banking sector. Social Responsibility Journal, 15(5), 689-709
Martínez-Campillo, A., Wijesiri, M., & Wanke, P. (2020). Evaluating the double bottom-line of social banking in an emerging country: How efficient are public banks in supporting priority and non-priority sectors in India?. Journal of business ethics, 162(2), 399-420.‏
McGeever, N., McQuinn, J., & Myers, S. (2020). SME liquidity needs during the COVID-19 shock (No. 2/FS/20). Central Bank of Ireland
Moradi, D., Sh, M., & Kh, T. (2019). The Effect of Realization of Social Development Banking Model on the Development and Economic Development of the Country with Emphasis on Banking Network. Journal of Iranian Social Development Studies11(42), 121-414
Mohd Nor, S., Abdul Rahim, R., & Che Senik, Z. (2016). The potentials of internalising social banking among the Malaysian Islamic banks. Environment, Development and Sustainability18(2), 347-37
Norvig P. and Russell S. J.(2010). Artificial Intelligence: A Modern Approach. Prentice Hall
Paulet, E., Parnaudeau, M., & Relano, F. (2015). Banking with ethics: Strategic moves and structural changes of the banking industry in the aftermath of the subprime mortgage crisis. Journal of Business Ethics131(1), 199-207
Rostami, Mohammadreza, Ahmad Nabizade, and Zahra Shahi. "Factors affecting credit risk of commercial banks of Iran with emphasis on banking and macroeconomic specific factors." Journal of Asset Management and Financing 6.4 (2018): 79-92
San-Jose, L., Retolaza, J. L., & Gutierrez-Goiria, J. (2011). Are ethical banks different? A comparative analysis using the radical affinity index. Journal of business ethics, 100(1), 151-173
Sadiq, M., Alajlani, S., Hussain, M. S., Ahmad, R., Bashir, F., & Chupradit, S. (2022). Impact of credit, liquidity, and systematic risk on financial structure: comparative investigation from sustainable production. Environmental Science and Pollution Research, 29(14), 20963-20975
Schueffel, P. Taming the beast: a scientific definition of fintech. Available at SSRN 3097312, 2016.
Smith, J. (2018). Efficiency and ethically responsible management. Journal of Business Ethics, 150(3), 603–618  
Thorat, A., Vanneman, R., Desai, S., & Dubey, A. (2017). Escaping and falling into poverty in India today. World Development, 93, 413–426.
srinivasan, A., & Thampy, A. (2017). The effect of relationships with government-owned banks on cash flow constraints: Evidence from India. Journal of Corporate Finance46, 361-373
Tlemsani, I. & R. Matthews. (2002). Ethical Banking: The Islamic View.
James, B. A. (2008). What Are the Mechanisms Linking Financial Development and Economic Growth in Malaysia; Economic Modeling, 25(1): 38-53
Weber, O., Diaz, M., & Schwegler, R. (2014). Corporate social responsibility of the financial sector – Strengths, weaknesses and the impact on sustainable development. Sustainable Development, 22(5), 321–335
Weber, O. and Y. Duan, Social finance and banking. Socially responsible finance and investing: Financial institutions, corporations, investors, and activists, 2012: p. 161-180.
Wehinger, G. (2014). SMEs and the credit crunch: Current financing difficulties, policy measures and a review of literature. OECD Journal: Financial Market Trends, 2013(2), 115-148.
Zhang, Y. et al., Research on credit scoring by fusing social media information in online peer-to-peer lending. Procedia Computer Science, 2016. 91: p. 168174.