Conflict of interest between borrowers and lenders in credit co- operatives: the case of German co-operative banks
AbstractOver the last few decades, the co-operative banking sector in Germany has steadily increased its market share at the expense of other types of banks. This outcome is surprising from the standpoint of traditional economic thinking about co-operatives, which suggests that they are most appropriate for "backward" economies. We develop a model of co-operative banks that highlights the dual role ofmembers as borrowers and lenders. We show that a shift in the median (hence pivotal) member of the co-operative from predominantly a borrower orientation toward a lender orientation causes the co-operative bank to shift its policy from underpricing credit toward the provision ofcompetitively priced credit and deposit services. Together with a nationwide supporting infrastructure to capture scale and scope economies (the Verbund), the market-oriented policy of German co-operative banks today allows them to compete successfully with other banking groups.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Federal Reserve Bank of St. Louis in its series Working Papers with number 1997-009.
Date of creation: 1997
Date of revision:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Besley, T. & Coate, S. & Loury, G., 1990.
"The Economics Of Rotating Savings And Credit Associations,"
149, Princeton, Woodrow Wilson School - Development Studies.
- Besley, Timothy & Coate, Stephen & Loury, Glenn, 1993. "The Economics of Rotating Savings and Credit Associations," American Economic Review, American Economic Association, vol. 83(4), pages 792-810, September.
- Besley, T. & Coate, S. & Loury, G., 1990. "The Economics Of Rotating Savings And Credit Associations," Working papers 556, Massachusetts Institute of Technology (MIT), Department of Economics.
- Timothy Besley & Stephen Coate & Glenn Loury, 1992. "The Economics of Rotating Savings and Credit Associations," Boston University - Institute for Economic Development 24, Boston University, Institute for Economic Development.
- Besley, T. & Coate, S. & Loury, G., 1992. "The economics of Rotating Savings and Credit Associations," Papers 157, Princeton, Woodrow Wilson School - Development Studies.
- Oliver Hart & John Moore, 1996.
"The Governance of Exchanges: Members' Co-operatives Versus Outside Ownership,"
STICERD - Theoretical Economics Paper Series
/1996/292, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Hart, Oliver & Moore, John, 1996. "The Governance of Exchanges: Members' Cooperatives versus Outside Ownership," Oxford Review of Economic Policy, Oxford University Press, vol. 12(4), pages 53-69, Winter.
- Kevin Davis, 2001. "Credit Union Governance and Survival of the Cooperative Form," Journal of Financial Services Research, Springer, vol. 19(2), pages 197-210, April.
- Gaisina, Sholpan, 2011. "Credit through Rural Credit Partnerships for Agricultural Producers in Kazakhstan," Journal of Rural Cooperation, Hebrew University, Center for Agricultural Economic Research, vol. 39(2).
- Aruna Srinivasan & B. Frank King, 1998. "Credit union issues," Economic Review, Federal Reserve Bank of Atlanta, issue Q 3, pages 32-41.
- William R. Emmons & Frank A. Schmid, 2002.
"Pricing and Dividend Policies in Open Credit Cooperatives,"
Journal of Institutional and Theoretical Economics (JITE),
Mohr Siebeck, Tübingen, vol. 158(2), pages 234-, June.
- William R. Emmons & Frank A. Schmid, 2000. "Pricing and dividend policies in open credit cooperatives," Working Papers 2000-008, Federal Reserve Bank of St. Louis.
- Oliver Hart & John Moore, 1998.
"Cooperatives vs. Outside Ownership,"
STICERD - Theoretical Economics Paper Series
346, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Oliver Hart & John Moore, 2004. "Cooperatives vs. Outside Ownership," ESE Discussion Papers 114, Edinburgh School of Economics, University of Edinburgh.
- Oliver Hart & John Moore, 1998. "Cooperatives vs. Outside Ownership," NBER Working Papers 6421, National Bureau of Economic Research, Inc.
- Oliver Hart & John Moore, 1998. "Cooperatives vs. Outside Ownership," Harvard Institute of Economic Research Working Papers 1816, Harvard - Institute of Economic Research.
- Ebrahim, M. Shahid, 2009.
"Can an Islamic model of housing finance cooperative elevate the economic status of the underprivileged?,"
Journal of Economic Behavior & Organization,
Elsevier, vol. 72(3), pages 864-883, December.
- M. Shahid Ebrahim, 2008. "Can an Islamic Model of Housing Finance Cooperative Elevate the Economic Status of the Underprivileged?," Papers on Economics of Religion 08/04, Department of Economic Theory and Economic History of the University of Granada..
- Murizah Osman Salleh & Aziz Jaafar & M. Shahid Ebrahim, 2012. "Can an interest-free credit facility be more efficient than a usurious payday loan?," Working Papers 12008, Bangor Business School, Prifysgol Bangor University (Cymru / Wales).
- McKillop, D. G. & Glass, J. C. & Ferguson, C., 2002. "Investigating the cost performance of UK credit unions using radial and non-radial efficiency measures," Journal of Banking & Finance, Elsevier, vol. 26(8), pages 1563-1591, August.
- Nicolas Le Pape & Sylvie Cieply & Rafik Abdesselam, 2002. "Les facteurs de différentiation des banquiers mutualistes et commerciaux en matière de financement des PME," Revue d'Économie Financière, Programme National Persée, vol. 67(3), pages 121-131.
- William R. Emmons & Frank A. Schmid, 1999. "Wages and risk-taking in occupational credit unions: theory and evidence," Review, Federal Reserve Bank of St. Louis, issue Mar, pages 13-32.
- William R. Emmons & Frank A. Schmid, 2001. "Membership structure, competition, and occupational credit union deposit rates," Review, Federal Reserve Bank of St. Louis, issue Jan, pages 41-50.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anna Xiao).
If references are entirely missing, you can add them using this form.