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Cooperative Banks in Europe

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  • Wim Fonteyne
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    Abstract

    This paper explains the continuing success of European cooperative banks through evolving comparative advantages. It points out that a cooperative is built around an intergenerational endowment without final owners, which creates particular governance challenges. Risks include the use of the endowment for purposes other than members'' best interest, such as empire-building, and attempts at appropriation. The risk of empire-building is reinforced by mechanisms that foster capital accumulation and asymmetric opportunities for consolidation. The paper concludes that some form of independent external oversight of corporate governance is warranted and that cooperatives need mechanisms enabling them to better manage their capital.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 07/159.

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    Length: 68
    Date of creation: 01 Jul 2007
    Date of revision:
    Handle: RePEc:imf:imfwpa:07/159

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    Related research

    Keywords: Bank supervision; Banks; European Union; Financial stability; Governance; Profits; banking; banking system; cooperative banking; banking sector; financial institutions; bank profitability; deposit insurance; cooperative bank; financial markets; joint-stock company; stock company; capital base; banking supervision; joint-stock companies; stock companies; credit union; financial services; return on equity; financial market; financial system; bank branches; financial sector; financial conglomerates; bond; banking market; deposit insurance scheme; banking system assets; common bond; interbank market; bank for international settlements; bank bonds; bank managers; joint stock; banking systems; banks ? assets; income statement; stock market; banking crisis; bank group; stock corporations; bankers; internal control; investment banking; financial systems; bonds; interest rate risk; retained earnings; bank capital; banking services; level playing field; derivatives markets; accounting treatment; banking law; bank behavior; stock banks; bank credit; hedge; bank holding companies; retail banking; bank ownership; cash flow; banking system stability; financial intermediation; banking industry; stock options; bank holding; stock ownership; bank shareholders; bank performance; bank market; bond yield; free cash flow; financial economics; asset-liability management; balance sheet growth; bank policy; earnings growth; bank equity; agricultural banking; liability management; moral hazard; financial risk; bank subsidiary; bank credit policies; government bond; revenue mobilization; liquidity support; government bond yield; excess liquidity; capital adequacy; holding company; bank subsidiaries;

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    References

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    Citations

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    Cited by:
    1. Fiordelisi, Franco & Mare, Davide Salvatore, 2013. "Probability of default and efficiency in cooperative banking," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 26(C), pages 30-45.
    2. Jones, Derek & Kalmi, Panu & Kauhanen, Antti, 2009. "The Effects of General and Firm-Spesific Training on Wages and Performance: Evidence from Banking," Discussion Papers 1184, The Research Institute of the Finnish Economy.
    3. Derek C. Jones & Panu Kalmi, 2012. "Economies of Scale Versus Participation: a Co-operative Dilemma?," Journal of Entrepreneurial and Organizational Diversity, European Research Institute on Cooperative and Social Enterprises, vol. 1(1), pages 37-64, December.
    4. Alexopoulos, Yiorgos & Goglio, Silvio, 2011. "Financial Cooperatives: Problems and Challenges in the Post-Crisis Era," Journal of Rural Cooperation, Hebrew University, Center for Agricultural Economic Research, vol. 39(1).
    5. Nicolas Véron & Morris Goldstein, 2011. "Too big to fail: the transatlantic debate," Working Papers 495, Bruegel.
    6. Cristian Barra & Sergio Destefanis & Giuseppe Lubrano Lavadera, 2013. "Regulation and the Crisis: The Efficiency of Italian Cooperative Banks," CSEF Working Papers 338, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    7. Fiordelisi, Franco & Mare, Davide Salvatore, 2014. "Competition and financial stability in European cooperative banks," Journal of International Money and Finance, Elsevier, vol. 45(C), pages 1-16.
    8. Christine Marsal, 2012. "La Gouvernance Mutualiste Comme Levier De Controle," Post-Print hal-00690973, HAL.
    9. Gál, Zoltán & Burger, Csaba, 2013. "A vidék bankjai?. A magyar takarékszövetkezeti szektor hitelezési aktivitása
      [Local finance?. Lending activity by the Hungarian cooperative banking sector]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(4), pages 373-401.

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