The Determinants of Membership in Cooperative Banks: Common Bond versus Private Gain

22 Pages Posted: 15 Jul 2016

See all articles by Derek C. Jones

Derek C. Jones

Hamilton College - Economics Department

Iiro Jussila

Lappeenranta University of Technology (LUT) - Department of Business Administration

Panu Kalmi

University of Vaasa

Date Written: September 2016

Abstract

Membership in organizations has been rarely studied by economists. We study the determinants of membership in financial cooperatives, organizations that have significant economic and social presence in many countries. By identifying economic and non‐economic incentives to be members of cooperatives, our conceptual framework is novel. Our empirical work analyzes panel data from 2001–2009 for Finnish cooperative banks and compares two empirical concepts of the membership ratio. We find evidence that monetary incentives are important reasons to join, but also the size of the community from which members are recruited plays a role. Over time, monetary incentives have increased and this may have contributed to faster growth in membership in cooperatives based in larger municipalities after these changes. Cooperatives attracting new members primarily on the basis of monetary rewards is also consistent, over time, with a reduction in the role of the common bond.

Keywords: ownership, membership, cooperative, bank, common bond, social enterprise, incentives

JEL Classification: G21, P13

Suggested Citation

Jones, Derek C. and Jussila, Iiro and Kalmi, Panu, The Determinants of Membership in Cooperative Banks: Common Bond versus Private Gain (September 2016). Annals of Public and Cooperative Economics, Vol. 87, Issue 3, pp. 411-432, 2016. Available at SSRN: https://ssrn.com/abstract=2809943 or http://dx.doi.org/10.1111/apce.12135

Derek C. Jones (Contact Author)

Hamilton College - Economics Department ( email )

198 College Hill Road
Clinton, NY 13323
United States
315-859-4381 (Phone)
315-859-4477 (Fax)

Iiro Jussila

Lappeenranta University of Technology (LUT) - Department of Business Administration ( email )

Lappeenranta
Finland

Panu Kalmi

University of Vaasa ( email )

P.O. Box 700
Wolffintie 34
FIN-65101 Vaasa, FI-65101
Finland

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