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Do Cooperative Banks Have Greater Market Power?

Author

Listed:
  • Damien Egarius

    (LaRGE Research Center, EM Strasbourg Business School)

  • Laurent Weill

    (LaRGE Research Center, EM Strasbourg Business School)

Abstract

This paper investigates if cooperative banks are different than their commercial counterparts in market power. We use data on a large set of banks over the period 2002-2008 from five European countries with an important market share for the cooperative banking industry (Austria, Denmark, France, Germany, and Italy). We measure bank market power with the Lerner index. We show that cooperative banks have a lower market power than commercial banks. This finding is explained by the governance of cooperative banks. As owners of cooperative banks are also clients of these banks, managers of cooperative banks have incentives to refrain from charging clients heavily.

Suggested Citation

  • Damien Egarius & Laurent Weill, 2014. "Do Cooperative Banks Have Greater Market Power?," Bankers, Markets & Investors, ESKA Publishing, issue 133, pages 24-33, November-.
    • Handle: RePEc:rbq:journl:i:133:p:24-33
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    Citations

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    Cited by:

    1. Christophe Godlewski & Dorota Skala & Laurent Weill, 2019. "Is Lending by Polish Cooperative Banks Procyclical?," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 69(4), pages 342-365, August.
    2. Egarius, Damien & Weill, Laurent, 2016. "Switching costs and market power in the banking industry: The case of cooperative banks," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 42(C), pages 155-165.

    More about this item

    Keywords

    Lerner Index; Competition; Cooperative Banks;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • P13 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Cooperative Enterprises

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