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Are financial cooperatives crowded out by commercial banks in the process of financial sector development?

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  • Anaïs Périlleux
  • Annabel Vanroose
  • Bert D'Espallier

Abstract

This paper investigates whether financial cooperatives are crowded out by commercial banks in the process of financial sector development. We use a self-constructed database (1990-2011) of financial cooperatives in 55 developing countries. Our empirical results are threefold. First, financial cooperatives tend to reach more members in countries where the commercial banking sector is weak. This validates their role as a market failure solution. Second, in the process of commercial bank expansion, financial cooperatives run the risk of being crowded out. Third, financial cooperatives seem to benefit from some kind of bank presence, especially as far as savings mobilization is concerned.

Suggested Citation

  • Anaïs Périlleux & Annabel Vanroose & Bert D'Espallier, 2016. "Are financial cooperatives crowded out by commercial banks in the process of financial sector development?," Working Papers CEB 16-002, ULB -- Universite Libre de Bruxelles.
  • Handle: RePEc:sol:wpaper:2013/223569
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    Cited by:

    1. Király, Júlia, 2016. "A magyar bankrendszer tulajdonosi struktúrájának átalakulása
      [Transformation of the ownership structure of the Hungarian banking system]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(7), pages 725-761.
    2. repec:kap:annfin:v:14:y:2018:i:2:d:10.1007_s10436-017-0307-y is not listed on IDEAS
    3. repec:eee:quaeco:v:64:y:2017:i:c:p:44-56 is not listed on IDEAS

    More about this item

    Keywords

    Financial cooperatives; Microfinance; Competition; Crowding out; Financial Sector Development;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • P13 - Economic Systems - - Capitalist Systems - - - Cooperative Enterprises

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