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Membership structure and dividend payout policies at Hungarian co-operative banks


  • Csaba Burger

    () (University of Oxford School of Geography and the Environment, South Parks Road, Oxford OX1 3QY, UK)


Co-operative banks are widely seen as sustainable alternatives to profit-driven banking. However, while most banks struggle to meet the stringent capital requirements of regulators, co-operative banks are in particular need of cautious capital-related decisions given their little ability to accommodate profit-driven equity investors. In fact, co-operative banks’ single greatest source of capital is their annual surplus.This paper first highlights that capital protection rules related to Hungarian co-operative banks are more liberal than those of other European co-operatives. This is followed by an analysis of Hungarian co-operative banks’ decisions on the distribution of annual surplus among their members. In doing so, the annual reports of 99 co-operative banks representing 73% of all Hungarian co-operatives are used, complemented with confidential data on the ownership structure of each co-operative.The study shows that a co-operative with a low number of members and a high amount of average subscribed capital per member is likely to distribute high dividends. This phenomenon is explained by the different nature of co-operatives according to the number of members. This result not only sends an alarming message to policy makers in Hungary and possibly elsewhere, but also contributes to the peculiarities of co-operative corporate governance.

Suggested Citation

  • Csaba Burger, 2013. "Membership structure and dividend payout policies at Hungarian co-operative banks," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 63(3), pages 287-308, September.
  • Handle: RePEc:aka:aoecon:v:63:y:2013:i:3:p:287-308
    Note: The author expresses his gratitude to Zoltán Gál for his support, comments and insights on co-operative banking, and to Holger Blisse and to Panu Kalmi for their detailed feedback on an earlier version of this paper. Special thanks are due to György Kálmán Kiss for his encouragement and to Ottó Bodnár for providing input for this paper. However, any omissions, misstatements or errors that remain are the author’s responsibility alone.

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    More about this item


    co-operative; banking; corporate governance; ownership structure; dividend payout policy; finance; Hungary;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • P13 - Economic Systems - - Capitalist Systems - - - Cooperative Enterprises
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies


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