Features, Facts and Figures of European Cooperative Banking Groups Over Recent Business Cycles

This paper complements the existing scarce literature on financial cooperatives in various ways. First, we describe the background and evolution of European Cooperative Banking Groups (ECBGs). Second, we summarize the main reasons for the past disregard and recent revaluation of the cooperative banking model. Third, we empirically investigate to what extent the financial performance of ECBGs over recent business cycles is related to the original cooperative characteristics. To this end, we have constructed a new database with a broad range of financial variables for fifteen ECBGs in ten countries and collected similar indicators for entire banking systems of the countries in question. Our empirical findings suggest that many previous assertions and qualitative statements about ECBGs really hold in practice and not just in periods of financial distress. Furthermore, ECBGs do exhibit a different performance compared to all other banks throughout different stages in recent business cycles. Their corporate governance with members' influence and specific decision making mechanisms seems to lead to a relatively low risk appetite and high capitalization, a high degree of stability and a predominant focus on retail banking. It must be emphasized that these conclusions cannot be extrapolated into the future. Indeed, an abundance of historical examples of successes and failures among all types of banks exists