Cooperative Banks in Europe - Policy Issues
70 Pages Posted: 23 Aug 2007
Date Written: July 2007
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.
Keywords: Working Paper, Banks, Europe, European Union, Bank supervision, Profits, Financial stability, Financial systems, Governance
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Cooperative Banks and Financial Stability
By Heiko Hesse and Martin Čihák
Investigating Diversity in the Banking Sector in Europe: Key Developments, Performance and Role of Cooperative Banks
By Rym Ayadi, David T. Llewellyn, ...
Investigating Diversity in the Banking Sector in Europe: The Performance and Role of Savings Banks
By Rym Ayadi, Reinhard H. Schmidt, ...
The Power of Networks: Integration and Financial Cooperative Performance
The Threat of Capital Drain: A Rationale for Public Banks?
By Hendrik Hakenes and Isabel Schnabel
Efficiency and Expense Preference in Philippines' Cooperative Rural Banks
By Martin Desrochers and Mario Lamberte
Theory and Test on the Corporate Governance of Financial Cooperative Systems: Merger vs. Networks
By Hendrik Hakenes and Christa Hainz