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Are Cooperative Banks a Lever for Promoting Bank Stability? Evidence from the Recent Financial Crisis in OECD Countries

Authors


  • We express our gratitude to John Wilson (University of St. Andrews), Frank Hong Liu (University of Glasgow) and Ettore Croci (Catholic University of Milan) and an anonymous referee for their helpful comments and suggestions, which greatly improved this article. We thank Nicola Tommasi (University of Verona) and Mariacristina Piva (Catholic University of Piacenza) for their support and assistance in the empirical analysis, Luigi Gallitto (Bureau van Dijk) for his assistance in gathering balance sheet data from the BankScope database. We also wish to thank the editor, John Doukas. Correspondence: Federica Poli.

Abstract

Based on a sample of cooperative, savings, and commercial banks from OECD countries, this paper examines whether and to what extent cooperative banks affected average bank soundness during 2001–2010. To account for the impact of the recent financial crisis, we analyse separately the pre-crisis period (2001–2006) and crisis years (2007–2010). Unlike published claims that blame the fragility of banking systems on the presence of non–profit-maximising entities, our main finding is that cooperative banks have explanatory power for stabilisation during the crisis years, but only above a certain market share threshold.

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