Democratic Governance Mechanisms in Cooperative Banks: A Reassessment

21 Pages Posted: 10 Jan 2018

See all articles by Mitja Stefancic

Mitja Stefancic

Univeristy of Ljubljana

Silvio Goglio

University of Trento - Department of Economics and Management

Ivana Catturani

European Research Institute on Cooperative & Social Enterprises (EURICSE); University of Trento

Multiple version iconThere are 2 versions of this paper

Date Written: December 15, 2017

Abstract

The governance of cooperative banks is arguably so distinctive that it cannot be properly captured by standard economic models. One of the problems that arises in the assessment of the assumed democratic governance in such banks refers to the members’ commitment to the banks. This paper considers the fact that it is not always clear whether cooperative banks’ members have the proper incentives to actively participate in making decisions that relate to bank strategies and policies. To shed light on this problem, this paper provides an improved framework of governance based on some seminal concepts by Albert O. Hirschman (1970), such as voice, exit and loyalty. Given the challenges that cooperative banks are currently facing, the arguments discussed in this paper should help illuminate the kind of reforms that such banks are expected to pursue in the coming years. Their governance model needs to be updated in practice to retain its specific features; otherwise, it may end up mirroring that of standard for-profit banks.

Keywords: Cooperative banks; Democratic governance; Commitment of members; Albert O. Hirschman

JEL Classification: D71; D72; G21; G3

Suggested Citation

Stefancic, Mitja and Goglio, Silvio and Catturani, Ivana, Democratic Governance Mechanisms in Cooperative Banks: A Reassessment (December 15, 2017). Euricse Working Papers, No. 99 | 17. Available at SSRN: https://ssrn.com/abstract=3095528 or http://dx.doi.org/10.2139/ssrn.3095528

Mitja Stefancic (Contact Author)

Univeristy of Ljubljana ( email )

Kardeljeva ploscad 17
Ljubljana, 1000
Slovenia

Silvio Goglio

University of Trento - Department of Economics and Management ( email )

Via Inama 5
Trento, I-38100
Italy

Ivana Catturani

European Research Institute on Cooperative & Social Enterprises (EURICSE) ( email )

Via S. Giovanni 36
38122 Trento (TN)
Italy

University of Trento ( email )

Via Giuseppe Verdi 26
Trento, Trento 38152
Italy

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