Cooperative banks: What do we know about competition and risk preferences?

Ephraim  Clark; Davide Mare; Nemanja Radic

doi:10.1016/j.intfin.2017.09.008

Cooperative banks: What do we know about competition and risk preferences?

Ephraim Clark, Davide Mare, Nemanja Radic

Research output: Contribution to journal › Article › peer-review

Abstract / Description of output

In the wake of the Global Financial Crisis the discussion on preventive regulatory policies has generally overlooked the role of different business models and goals. Credit institutions with mutual objectives are a case in point that is the object of this study, which focuses on the relationship between competition and financial stability in European cooperative banking between 2006 and 2014. Our results show that there exists a hump-shaped relationship between market power and stability, particularly in the loan market. Interestingly, we also find that, diversification in assets and liabilities significantly increases cooperative banks’ solvency.

Original language	English
Pages (from-to)	90-101
Journal	Journal of International Financial Markets, Institutions and Money
Volume	52
Early online date	14 Sept 2017
DOIs	https://doi.org/10.1016/j.intfin.2017.09.008
Publication status	Published - 30 Jan 2018

Keywords / Materials (for Non-textual outputs)

bank risk-taking
cooperative banks
competition
market structure
diversification

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10.1016/j.intfin.2017.09.008

ClarkEtalJIFMIM2014CooperativeBanksFinal published version, 371 KBLicence: Creative Commons: Attribution-NonCommercial-NoDerivatives (CC BY-NC-ND)

Financial Engineering and Banking Society
Davide Mare (Participant)
10 Jun 2016
Activity: Participating in or organising an event types › Participation in conference

Cite this

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title = "Cooperative banks: What do we know about competition and risk preferences?",

abstract = "In the wake of the Global Financial Crisis the discussion on preventive regulatory policies has generally overlooked the role of different business models and goals. Credit institutions with mutual objectives are a case in point that is the object of this study, which focuses on the relationship between competition and financial stability in European cooperative banking between 2006 and 2014. Our results show that there exists a hump-shaped relationship between market power and stability, particularly in the loan market. Interestingly, we also find that, diversification in assets and liabilities significantly increases cooperative banks{\textquoteright} solvency.",

keywords = "bank risk-taking, cooperative banks, competition, market structure, diversification",

author = "Ephraim Clark and Davide Mare and Nemanja Radic",

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doi = "10.1016/j.intfin.2017.09.008",

language = "English",

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T2 - What do we know about competition and risk preferences?

AU - Clark, Ephraim

AU - Mare, Davide

AU - Radic, Nemanja

N1 - Gold Open Access

PY - 2018/1/30

Y1 - 2018/1/30

N2 - In the wake of the Global Financial Crisis the discussion on preventive regulatory policies has generally overlooked the role of different business models and goals. Credit institutions with mutual objectives are a case in point that is the object of this study, which focuses on the relationship between competition and financial stability in European cooperative banking between 2006 and 2014. Our results show that there exists a hump-shaped relationship between market power and stability, particularly in the loan market. Interestingly, we also find that, diversification in assets and liabilities significantly increases cooperative banks’ solvency.

AB - In the wake of the Global Financial Crisis the discussion on preventive regulatory policies has generally overlooked the role of different business models and goals. Credit institutions with mutual objectives are a case in point that is the object of this study, which focuses on the relationship between competition and financial stability in European cooperative banking between 2006 and 2014. Our results show that there exists a hump-shaped relationship between market power and stability, particularly in the loan market. Interestingly, we also find that, diversification in assets and liabilities significantly increases cooperative banks’ solvency.

KW - bank risk-taking

KW - cooperative banks

KW - competition

KW - market structure

KW - diversification

U2 - 10.1016/j.intfin.2017.09.008

DO - 10.1016/j.intfin.2017.09.008

M3 - Article

SN - 1042-4431

VL - 52

SP - 90

EP - 101

JO - Journal of International Financial Markets, Institutions and Money

JF - Journal of International Financial Markets, Institutions and Money

ER -

Cooperative banks: What do we know about competition and risk preferences?

Abstract / Description of output

Keywords / Materials (for Non-textual outputs)

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Financial Engineering and Banking Society

Cite this