Is Competition Among Cooperative Banks a Negative Sum Game?

Center for Relationship Banking and Economics Working Paper Series, Working Paper No. 19 March 2017

40 Pages Posted: 3 Apr 2019

See all articles by Paolo Coccorese

Paolo Coccorese

University of Salerno - Department of Economics

Giovanni Ferri

LUMSA University

Date Written: March 15, 2017

Abstract

Does ‘inner’ competition – rivalry among network members – worsen performance in a network of cooperative banks? Inner competition might, in fact, endanger network-dependent scale economies. We test our hypothesis on Banche di Credito Cooperativo (BCCs), Italy’s network of mutual cooperative banks. We find a worsening of performance both at incumbent and (even more) at aggressor BCCs when they compete among themselves. Instead, the worsening is mild when BCCs compete with non-BCC comparable banks. We conclude that inner competition among cooperative banks is a negative sum game and, thus, limiting it would be desirable to preserve the stability of cooperative banking networks.

Keywords: Cooperative Banks, Rivalry Among Network Members, Strategic Interactions, Negative Sum Game

JEL Classification: D47, G21, G34

Suggested Citation

Coccorese, Paolo and Ferri, Giovanni, Is Competition Among Cooperative Banks a Negative Sum Game? (March 15, 2017). Center for Relationship Banking and Economics Working Paper Series, Working Paper No. 19 March 2017. Available at SSRN: https://ssrn.com/abstract=3353897 or http://dx.doi.org/10.2139/ssrn.3353897

Paolo Coccorese

University of Salerno - Department of Economics ( email )

Via Giovanni Paolo II, 132
Fisciano, Salerno 84084
Italy

Giovanni Ferri (Contact Author)

LUMSA University ( email )

Via della Traspontina
Roma, Rome 00192
Italy

HOME PAGE: http://www.lumsa.it/giovanni-ferri

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