Co-operative Banking in Austria

Co-operative banking developed rapidly in Austria during the second half of the nineteenth century, following the ideas and principles of Schulze-Delitzsch and Raiffeisen. Today, the prevailing “alternative nature” of Austria’s highly competitive banking sector is demonstrated by the market dominance of two co-operative networks, Raiffeisen banks and to a lesser extent Volksbanks, which together provide almost 82% of the country’s total banks. Overall, in the period 2008–2017 the co-operative model shows significant differences in terms of higher capital and liquidity and lower investment space allocated to securities. It turns out to be slightly less involved in lending to customers when compared with the peer non-co-operative groups. However, if we turn to the credit risk exposure of the co-operative sector and the profitability results obtained from it, we find that the combination of risks and returns for the various bank models is rather similar over time. Additionally, co-operative banks (CBs) maintain a degree of operational inefficiency that is significantly higher than that of their peers among the joint-stock and savings banks.