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

Ephraim Clark, Davide Mare, Nemanja Radic

Research output: Contribution to journalArticlepeer-review

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’ solvency.
Original languageEnglish
Pages (from-to)90-101
JournalJournal of International Financial Markets, Institutions and Money
Volume52
Early online date14 Sep 2017
DOIs
Publication statusPublished - 30 Jan 2018

Keywords

  • bank risk-taking
  • cooperative banks
  • competition
  • market structure
  • diversification

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