The ethical finance as a response to the financial crises: an empirical survey of European SRFs performance

The research aims to verify the linkage between ethics and financial value through the analysis of the risk/return relationship of the socially responsible funds (SRFs). In particular, the study deepens theoretical and empirical aspects of the ethical finance during the last two strong financial crisis of 2008 and 2011, in order to verify if ethics pays- off during the most severe bear phases of the markets. So, the empirical work is focused on the comparison between the financial performance of a European panel of 107 Socially Responsible Funds and 87 conventional funds that are listed by Morningstar Direct. The results are consistent with the hypothesis for which the investments that consider social and ethical issues in the allocation process are less aggressive and able to contain the negative effects during the apical phases of crises. In this sense, the SRFs appear to behave as a sort of refuge funds'' for the investor.