European cooperative banks: unique features, contemporary relevance and performance

Abstract

Abstract This article merges insights from theoretical and empirical literature with unique recent data on the aggregated cooperative banking sector in Europe. It also compares the performance of cooperative banks collectively with that of other banks operating in the same countries. These findings are assessed in light of longstanding distinctive characteristics of cooperative banks and their differences vis-a-vis other banks, with particular attention paid to the situation in German banking. Recent data confirm that, owing to their member-based nature, cooperative banks pursue a less risky business model with a stronger focus on the real economy. In this respect, they deviate significantly from other banks and thereby contribute to diversity within the banking sector. Such diversity, in turn, enhances stability and resilience in banking. Regulatory frameworks should therefore recognize and preserve this institutional diversity.