The Roots of Cooperative Credit from a Theoretical and Historical Perspective

Abstract

Credit is indubitably one of the most important sectors in which the supply of goods and services by cooperatives has arisen. Given the importance of the role of cooperative banks in the development of other sectors and of the territories or communities in which they operate, and the economic and political power that they consequently confer on those who manage them, some of the inherent problems distinctive in general of not-for-profit organizations become critical. In particular: in the case of rapid growth beyond the original group and area, the possibility of maintaining the principles of reciprocity and participation; the role and motivations of the social entrepreneurs acting in the bank; the corporate social responsibility, which, in the case of a bank, is closely connected to how the community’s savings are employed and how investments are selected. As with other cooperative enterprises, credit can be supplied in a variety of forms with different purposes and with different positive and/or negative externalities. Evaluation of the respective advantages and disadvantages must bear in mind the different contexts in which individual banks operate, considering both theoretical aspects (potentialities) and historical ones (past and present modes of operation). These inherent problems are discussed in the first part of the work from a theoretical point of view; while in the second part the first applications and the debate that accompanied them are analysed, given their importance in determining the features of subsequent experiences. In particular, we shall show that they stem from two different interpretations of solidarity and reciprocity: the first one, theorized and, to a certain extent, realized in the Raiffeisen model, is mainly ethical in nature; the second one, typical of the Schulze Delitzsch model, is more closely tied to individual interests tempered by social responsibility.

Keywords: credit cooperatives, Schulze Delitzsch model, externalities, solidarity

JEL Classification: D21, D53, G21, N24, P13