Are cooperative banks better equipped to weather financial crisis than their commercial counterparts?

evidence from the Italian banking sector before and during the credit crisis

Abstract

Background and Purpose: The aim of this paper is to empirically investigate the performance of different types of Italian banks before and during the recent credit crisis with an emphasis on the behaviour of cooperative banks. It is well established in theory that cooperative banks follow more conservative business strategies and care more for stakeholders in comparison to commercial banks. On this background, the paper tries to show the empirical effects of those characteristics on the cooperative bank’s performance during financial distress compared to commercial banks. In fact, the paper can prove that Italian cooperative banks were less exposed to the shocks of the crisis and showed a better performance. Methodology: In order to assess whether cooperative banks performed differently at all from commercial banks during the 2005-2012 period, return on average assets (ROAA), cost efficiency and loan quality have been investigated by means of a sample of 594 Italian banks, pooled OLS and (when possible) a fixed effects estimator. Results: Overall, Italian cooperative banks performed better than other Italian banks during the financial crisis. The quality of loans deteriorated less in these banks than in others, while no significant differences have been observed in terms of ROAA and cost efficiency between these and other banks. Conclusion: My paper provides empirical evidence for a well established theoretically derived hypothesis: Italian cooperative banks operate differently than standard commercial banks which is especially noticeable during times of crisis. The fact empirically demonstrated that different banking models have shown different reactions to the financial crisis and economic downturn has important policy implications. Due to both characteristics of cooperative banks and severe limitations in the financial policies by the Italian government during the credit crisis an ironical pattern has emerged: While Italian cooperative banks were less exposed to the shocks of the crisis, they would have been less able to adjust to them since the financial rescue program was designed primarily for commercial banks.

Keywords

cooperative banks;bank performance;bank efficiency;bank soundness;credit crisis;

Data

Language:	English
Year of publishing:	2016
Typology:	1.01 - Original Scientific Article
Organization:	UM FOV - Faculty of Organizational Sciences
UDC:	336.713(450):338.124.4
COBISS:	285685248
ISSN:	1318-5454
Parent publication:	Organizacija
Views:	1099
Downloads:	145
Average score:	0 (0 votes)
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Other data

Secondary language:	Slovenian
Secondary title:	So zadružne banke v primerjavi s poslovnimi bankami bolje opremljene za premoščanje finančne krize?
Secondary abstract:	Ozadje in namen: Cilj prispevka je empirično preučiti vedenje različnih tipologij bank pred in finančno krizo v obdobju krize s poudarkom na zadružnih bankah. Teoretska podlaga poudarja konservativne poslovne strategije, ki so značilne za zadružne banke, obenem pa te banke posvečajo večjo pozornost interesnim skupinam kot pa poslovne banke. Na tej osnovi si prispevek prizadeva, da bi osvetlil empirične učinke omenjenih značilnosti na vedenje zadružnih bank med finančno krizo. Metodologija: Za preverjanje, ali so zadružne banke poslovale različno kot poslovne banke v obdobju 2005-2015, se prispevek osredotoča na donosnost, stroškovno učinkovitost in uspeh pri posojilih v vzorcu 594 italijanskih bank prek OLS metode in (kjer se da) z metodo fiksnih učinkov. Rezultati: Nasplošno so se med poslovanjem italijanske zadružne banke bolje odrezale kot ostale banke. Kakovost pri izdajanju posojil je bila višja, medtem ko iz rezultatov ni bilo opaziti večjih razlik pri pokazateljih za donosnost in stroškovno učinkovitost. Zaključek: Prispevek empirično dokazuje s teoretskega vidika že uveljavljeno hipotezo: in sicer, italijanske zadružne banke poslujejo različno od standardnih poslovnih bank, kar je opazno predvsem v obdobjih krize. To empirično podpira ugotovitev, da so se različne tipologije bank različno odzvale na finančno in gospodarsko krizo, kar ima pomembne posledice za tvorce finančne politike. Zaradi specifičnosti zadružnih bank in regulative italijanske vlade med krizo, se je pojavila ironična situacija: čeprav je kriza v manjši meri učinkovala na italijanske zadružne banke, so se slednje slabše prilagodile nanjo kajti reševalni program je bil namenjen predvsem poslovnim bankam.
Secondary keywords:	Italija;bančništvo;banke;lastnina;kapitalska razmerja;uspešnost poslovanja;ekonomska kriza;
URN:	URN:NBN:SI
Type (COBISS):	Scientific work
Pages:	str. 108-126
Volume:	ǂVol. ǂ49
Issue:	ǂno. ǂ2
Chronology:	May 2016
DOI:	10.1515/orga-2016-0008
ID:	10883096