IDEAS home Printed from https://ideas.repec.org/a/trn/csnjrn/v8i1p22-41.html
   My bibliography  Save this article

Democratic Governance Mechanisms in Cooperative Banks: A Reassessment

Author

Listed:
  • Mitja Stefancic

    (University of Lijubiana)

  • Silvio Goglio

    (Università degli Studi di Trento; Euricse)

  • Ivana Catturani

    (Università degli Studi di Trento; Euricse)

Abstract

The governance of cooperative banks is arguably so distinctive that it cannot be properly captured by standard economic models. One of the problems that arises in the assessment of the assumed democratic governance in such banks refers to the members’ commitment to the banks. This paper considers the fact that it is not always clear whether cooperative banks’ members have the proper incentives to actively participate in making decisions that relate to bank strategies and policies. To shed light on this problem, this paper provides an improved framework of governance based on some seminal concepts by Albert O. Hirschman (1970), such as voice, exit and loyalty. Given the challenges that cooperative banks are currently facing, the arguments discussed in this paper should help illuminate the kind of reforms that such banks are expected to pursue in the coming years. Their governance model needs to be updated in practice to retain its specific features; otherwise, it may end up mirroring that of standard for-profit banks.

Suggested Citation

  • Mitja Stefancic & Silvio Goglio & Ivana Catturani, 2019. "Democratic Governance Mechanisms in Cooperative Banks: A Reassessment," Journal of Entrepreneurial and Organizational Diversity, European Research Institute on Cooperative and Social Enterprises, vol. 8(1), pages 22-41.
    • Handle: RePEc:trn:csnjrn:v:8:i:1:p:22-41
    as

    Download full text from publisher

    File URL: https://jeodonline.com/jeod_articles/democratic-governance-mechanisms-in-cooperative-banks-a-reassessment/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Frey, Bruno S, 1970. "Models of Perfect Competition and Pure Democracy," Kyklos, Wiley Blackwell, vol. 23(4), pages 736-755.
    2. Derek Jones & Panu Kalmi, 2015. "Membership and Performance in Finnish Financial Cooperatives: A New View of Cooperatives?," Review of Social Economy, Taylor & Francis Journals, vol. 73(3), pages 283-309, September.
    3. Timothy Besley & Stephen Coate, 1997. "An Economic Model of Representative Democracy," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(1), pages 85-114.
    4. Timothy Besley & Stephen Coate, 2001. "Lobbying and Welfare in a Representative Democracy," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 68(1), pages 67-82.
    5. Derek C. JONES & Iiro JUSSILA & Panu KALMI, 2016. "The Determinants Of Membership In Cooperative Banks: Common Bond Versus Private Gain," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 87(3), pages 411-432, December.
    6. Mitja Stefancic & Silvio Goglio & Ivana Catturani, 2017. "Democratic Governance Mechanisms in Cooperative Banks: A Reassessment," Euricse Working Papers 1799, Euricse (European Research Institute on Cooperative and Social Enterprises).
    7. Malleson, Tom, 2014. "After Occupy: Economic Democracy for the 21st Century," OUP Catalogue, Oxford University Press, number 9780199330102.
    8. Steven Callander, 2008. "Political Motivations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 75(3), pages 671-697.
    9. Giovanni Ferri & Panu Kalmi & Eeva Kerola, 2015. "Organizational Structure and Performance in European Banks: A Reassessment," Advances in the Economic Analysis of Participatory & Labor-Managed Firms, in: Advances in the Economic Analysis of Participatory & Labor-Managed Firms, volume 16, pages 109-141, Emerald Group Publishing Limited.
    10. Bruno S. Frey, 1970. "Models Of Perfect Competition And Pure Democracy," Kyklos, Wiley Blackwell, vol. 23(4), pages 736-755, November.
    11. Gorton, Gary & Schmid, Frank, 1999. "Corporate governance, ownership dispersion and efficiency: Empirical evidence from Austrian cooperative banking," Journal of Corporate Finance, Elsevier, vol. 5(2), pages 119-140, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Theo Benos & Nikos Kalogeras & Martin Wetzels & Ko De Ruyter & Joost M. E. Pennings, 2018. "Harnessing a ‘Currency Matrix’ for Performance Measurement in Cooperatives: A Multi-Phased Study," Sustainability, MDPI, vol. 10(12), pages 1-38, December.
    2. Roberti, Paolo, 2019. "Citizens or lobbies: Who controls policy?," Games and Economic Behavior, Elsevier, vol. 113(C), pages 497-514.
    3. Scott Gehlbach & Konstantin Sonin & Ekaterina Zhuravskaya, 2010. "Businessman Candidates," American Journal of Political Science, John Wiley & Sons, vol. 54(3), pages 718-736, July.
    4. Jaideep Roy & Marcin Dziubinski, 2008. "Electoral Competition amongst Citizen-candidates and Downsian Politicians," CEDI Discussion Paper Series 08-10, Centre for Economic Development and Institutions(CEDI), Brunel University.
    5. Ferraz, Claudio & Finan, Frederico S., 2008. "Motivating Politicians: The Impacts of Monetary Incentives on Quality and Performance," IZA Discussion Papers 3411, Institute of Labor Economics (IZA).
    6. Prasenjit Banerjee & Vegard Iversen & Sandip Mitra & Antonio Nicolò & Kunal Sen, 2018. "Politicians and Their Promises in an Uncertain World: Evidence from a Lab-in-the-Field Experiment in India," Economics Discussion Paper Series 1806, Economics, The University of Manchester.
    7. Antonio Merlo, 2005. "Whither Political Economy? Theories, Facts and Issues," PIER Working Paper Archive 05-033, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 01 Dec 2005.
    8. Binyamin Berdugo, 2006. "What It Takes to Be a Leader: Leadership and Charisma in a Citizen-Candidate Model," Working Papers 0612, Ben-Gurion University of the Negev, Department of Economics.
    9. Topi Miettinen & Panu Poutvaara, 2006. "Political Parties and Network Formation," CESifo Working Paper Series 1663, CESifo.
    10. Yasushi Asako, 2010. "Partially Binding Platforms: Political Promises as a Partial Commitment Device," IMES Discussion Paper Series 10-E-01, Institute for Monetary and Economic Studies, Bank of Japan.
    11. Yasushi Asako, 2015. "Campaign promises as an imperfect signal: How does an extreme candidate win against a moderate candidate?," Journal of Theoretical Politics, , vol. 27(4), pages 613-649, October.
    12. R. Emre Aytimur & Aristotelis Boukouras & Robert Schwager, 2012. "The Citizen-Candidate Model with Imperfect Policy Control," CESifo Working Paper Series 3900, CESifo.
    13. Ilona Babenko & Viktar Fedaseyeu & Song Zhang, 2017. "Executives In Politics," BAFFI CAREFIN Working Papers 1762, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    14. Jan Klingelhöfer, 2019. "Lobbying And Elections," Bulletin of Economic Research, Wiley Blackwell, vol. 71(1), pages 1-17, January.
    15. Raghabendra Chattopadhyay & Esther Duflo, 2004. "Women as Policy Makers: Evidence from a Randomized Policy Experiment in India," Econometrica, Econometric Society, vol. 72(5), pages 1409-1443, September.
    16. Klingelhöfer, Jan, 2013. "Lobbying and Elections," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79722, Verein für Socialpolitik / German Economic Association.
    17. Navin Kartik & R. Preston McAfee, 2007. "Signaling Character in Electoral Competition," American Economic Review, American Economic Association, vol. 97(3), pages 852-870, June.
    18. Miettinen, Topi & Poutvaara, Panu, 2006. "Political Parties and Rent-seeking through Networks," Munich Reprints in Economics 19204, University of Munich, Department of Economics.
    19. Andrea Mattozzi & Matias Iaryczower, 2008. "Ideology and Competence in Alternative Electoral Systems," 2008 Meeting Papers 980, Society for Economic Dynamics.
    20. Yasushi Asako, 2015. "Partially Binding Platforms: Campaign Promises vis-à-vis Cost of Betrayal," The Japanese Economic Review, Japanese Economic Association, vol. 66(3), pages 322-353, September.

    More about this item

    Keywords

    Cooperative banks; Democratic governance; Commitment of members; Albert O. Hirschman;
    All these keywords.

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G3 - Financial Economics - - Corporate Finance and Governance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:trn:csnjrn:v:8:i:1:p:22-41. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Barbara Franchini (email available below). General contact details of provider: https://edirc.repec.org/data/euricit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.