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2022 | Buch

Contemporary Trends in European Cooperative Banking

Sustainability, Governance, Digital Transformation, and Health Crisis Response


Über dieses Buch

The cooperative banks’ business model is unique in the financial market. It is featured by democratic foundations (one-head-one-vote principle), proximity to the members and the community they serve, limited profit-seeking nature, and prudent management. However, these principles are applied in a variety of organisational structures and economic and regulatory contexts, making cooperative banks significantly different from one country to another. This book expands existing knowledge on the European cooperative banking sector by analysing recent trends affecting cooperative banks. Namely, the book discusses the role of cooperative banks in the policy and societal movement towards sustainability, including in adopting sustainable finance practices. It explores the digital transformation journey of cooperative banks and the impact of the consolidation of Fintech players in the financial services markets. It further showcases the need to evolve the cooperative banks’ governance structures and processes in order to foster (and in some cases restore) democracy and transparency in the decision-making. Lastly, the book debates the specific role of cooperative banks in the economic crisis that has followed the unfolding of the Covid-19 pandemic vis-à-vis their members and the communities they serve. Of interest to scholars, professors, students, and practitioners of banking and finance, this book will build on the existing research and explore the latest trends in the space.


Chapter 1. The Co-evolutionary Nature of European Cooperative Banks
The remarkable evolution of cooperative banks from their origins to date, being the result of a mix of strategic proactivity and changing boundaries in the environment in which they compete, has periodically imposed a reassessment of the way founding cooperative principles could be applied. The enlargement towards non-members, the creation of nation-wide groups, the deployment of digitalisation—all actions that served to compete in the market—have had on the other hand a progressively detrimental impact on some of the cooperative banks’ differentiating characteristics such as democratic governance, proximity and, at a lesser extent, limited profit-seeking. Looking forward, we argue that sustainability revolution will further shape the market and bring new challenges in terms of effective differentiation vis-à-vis profit-oriented organisations.
Marco Migliorelli, Eric Lamarque
Chapter 2. The Founding Role of Cooperative Banking Within the European Variety of Capitalism
This chapter analyses the relationship between the cooperative banking sector and the European variety of capitalism. Contrary to the idea of Francis Fukuyama, expressed in his book “The End of History and the Last Man”, capitalism shows a great variety of manifestations among different countries. Yet, in spite of heterogeneity across countries, continental Europe—in substance matching the European Union (EU) after Brexit—shows greater propensity to solidarity, compared to the United States and the United Kingdom. Cooperative banks, with their intangible values based on brotherhood, equity and communitarian engagement, remain a socio-economic pillar that supports the EU in its way forward towards the common good, including within the European Green Deal and the Next Generation EU programs.
Giovanni Ferri, Angelo Leogrande
Chapter 3. Cooperative Banks and EU Regulation: A General Assessment
Effective regulation in banking can be considered as a public good, since it sets out to create positive externalities for a broad spectrum of economic actors, as businesses, families and banks themselves. However, the process of designing such regulation is not a neutral one. This chapter focuses on the new regulatory framework under which cooperative banks in Europe operate. Our argument is that, despite their complexity and a call for proportionality, these rules are not optimal for such banks, whose characteristics and role in the economy are not taken into account. As a result, this framework imposes a heavy burden on them, and may significantly affect their organisation, business model and corporate values, thereby impoverishing the biodiversity of the banking system.
Silvio Goglio, Mitja Stefancic
Chapter 4. How Can Members Contribute More to Cooperative Life and Decision Processes?
The aim of this chapter is to analyse how to involve more and better members in the decision-making processes of the bank. I discuss some requirement, guidelines and examples to show how to better consider the contribution of members and to allow cooperative banks to maintain one of the founding features of their governance model. Cooperative banks have to consider the diversity of expectations and motivations to become a member and the difference existing between members and simple customers. The value added given by membership has to be built by the cooperative itself on alternative basis compared to economic and financial value, by an innovative way of participating to decisions at individual level (from the basis up until board level).
Eric Lamarque
Chapter 5. Decentralization of Decisions and Governance of Risk in Cooperative Contexts
As for any financial institution, the governance of risks in cooperative banks is a central matter of strategic and management concern. The purpose of this chapter is to explore how cooperative banks tackle the challenge of the governance of risks. More particularly, we investigate how the decentralization of decisions in cooperative banks, combined with a strong anchor and communication on cooperative values, help mitigate risks. We focus particularly on credit risk, which is one of the most important risks for this type of banks. To discuss how the decentralization of decisions supports governance of risks, we present the case of a French cooperative banking group. Findings show the importance of the notion of “shared risk-taking” in credit decisions and of the multidimensional features of soft information use.
Nathalie Bénet, Aude Deville, Séverine Ventolini
Chapter 6. When Cooperative Banks Are Dealing with One Cooperative Fintech Firm: What Can We Learn from the Sociology of Markets?
A French example of cooperation between a cooperative bank and a cooperative fintech firm, that has developed a digital platform to support intercompany barter transactions, gives us the opportunity to study what is at stake in the relationship between actors sharing both the will for innovation and the cooperative status. The analysis of this case study leads us to describe the cooperative game and to understand how cooperatives can effectively cooperate. According to the sociology of market scholars, we question the idea that economics could sufficiently make sense of what happens in markets and we explore the complexity and barriers of the cooperation between cooperatives in the field of finance when the sector is disrupted by new technologies.
Cynthia Srnec, Philippe Eynaud
Chapter 7. The Cooperative Difference in the Management Styles and Objectives: Phantom Effect of Credit Cooperative
A spectre is haunting Europe: the spectre of communism” is how the Communist Manifesto famously starts. A spectre is now haunting Europe, the spectre of the credit unions. The difference is that Marx and Engels saw that spectre as a living force, capable of materialising and transforming reality, while whether the spectre in the second case will be able to materialise into an alternative capable of challenging the supremacy of commercial banking is doubtful. Is there a significant difference between cooperative and commercial banking? This is the question that want to answer in this chapter. The chapter identifies the possible existence of a “phantom effect” in the image projected by financial cooperatives. The Monetary Social Accounting is proposed as an antidote to this effect.
Jose Luis Retolaza, Leire San-Jose
Chapter 8. European Cooperative Banks and Sustainability
An unprecedented transformation of the European economy is needed to achieve the goals of the Paris Agreement, the EU Green Deal and the SDGs. This transformation requires channelling massive public and private financing. Cooperative banks have integrated environmental, social and governance (ESG) considerations in their model since their origins. They are therefore well positioned to support the sustainability transformation, including as concerns mainstreaming sustainable finance. The way forward for cooperative banks in sustainability will be intrinsically linked to the evolution path of their main clients, that is SMEs, households and local communities. Bottlenecks in the transformation paths of these actors (e.g. linked to regulation, insufficient incentives or lack of awareness) will hence reflect on the effectiveness of cooperative banks in supporting the sustainable transition.
Elisa Bevilacqua
Chapter 9. How Do Cooperative Banks Consider Climate Risk and Climate Change?
Climate change is one of the major trends that have been affecting cooperative banks in recent times. The cooperative banking sector has a central role to play in providing the finance needed to catalyse the low-carbon transition and accomplish existing climate change-related targets. The aim of this chapter is to establish the current state of knowledge about the implications of climate change for the cooperative banking sector. It examines the key features of the cooperative banks’ business model that are likely to shape the impact of climate-related risk factors on financial risks faced by cooperative banks, along with the main sets of practices that have been adopted by the largest European cooperative banks to respond to the risks and opportunities posed by a changing climate.
Giorgio Caselli
Chapter 10. Profitability and Digitalisation: The Effects on Cooperative Banks and Their Governance
Cooperative banks exhibit a particular governance, because they consist of multiple locally anchored banks often collaborating in a larger cooperative banking group. Moreover, their core business is in retailing banking focussing on a close relationship to their customers. Digitalisation significantly change these two main characteristics of cooperative banks and therefore threatens the profitability of cooperative banks. This contribution will outlines how the cooperative banks’ governance structure relates to their business and to their profitability. It explores the channels how digitalisation may affect the current structures of cooperative banks and their groups. Examples are given on how cooperative banks react to the challenges of digitalisation.
Eric Meyer
Chapter 11. How Do Cooperative Banks Build Their Own Proximity Type in the Social Media
On the basis of the theoretical context of proximity, this chapter aims at offering a better understanding of a possible new proximity construction for cooperative banks. It underlines how the brand as a symbolic and meaningful resource can constitute a relevant tool to propose a distinctive proximity according to the cooperative bank identity. The results obtained reveal that, based on the brand status defended by a sample of French cooperative banks on social networks and the suggested relational style, discourses on different proximity types can be built: an invitation to self-enrichment, a promise of social recognition, a demonstration of similarity. From identification (similarity) to self-expansion (self-enrichment) or aspirational projection (social recognition), brands can create different universes of proximity that might nourish their genuineness and originality.
Nathalie Veg-Sala, Valérie Zeitoun, Géraldine Michel
Chapter 12. Conclusions
Companies have to continuously assess the sustainability of their competitive advantage. To this extent, cooperative banks need today to reflect on how to use cooperative values to maintain their own competitive positioning. It seems clear that cooperative banks must change some of their habits, mobilize stakeholders around their core distinguishing values and think how to reinforce the commitment of their members within the model, especially as concerns young generations. A failure in doing that will likely produce a loss in distinctiveness and, in the longer term, in the value added of the cooperative model in banking.
Eric Lamarque, Marco Migliorelli
Contemporary Trends in European Cooperative Banking
herausgegeben von
Dr. Marco Migliorelli
Prof. Dr. Eric Lamarque
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