Skip to main content
SpringerLink
Log in

Co-operative Banking Networks: Rationalities and Models

  • Chapter
  • First Online:
Co-operative Banking Networks in Europe

Abstract

Networks build relationships between co-operative banks (CBs) that have joined together for mutual benefit or to achieve a common purpose. The need to build alliances tends to increase in relation to the number of CBs existing in a territory, offering benefits in terms of supply alliances, monitoring functions, and the creation of social capital. This chapter examines the rationales for and structures of co-operative banking networks both from a theoretical perspective and as exemplified in the European countries under investigation. The typologies detailed include single- and multi-tiered horizontal and vertical networks, along with their governance structures.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 119.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 159.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 159.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

  1. 1.

    According to Teece (1992), alliances are better suited than market transactions to the repeated exchange of tacit, routine-embedded knowledge because of the increased social interaction and enhanced incentive alignment and monitoring features on which they are grounded.

  2. 2.

    However, as noted by Fonteyne (2007), the lower turnover in CBs as well as their main focus on traditional retail banking activities may lessen their attraction to top talent. This, in turn, may limit the ability of CBs to enter and develop more sophisticated financial market activities. A remedy to these sources of potential limitations has been found by large CB networks in the segregation of more innovative financial businesses into separate entities, more often with a joint-stock legal nature.

  3. 3.

    With some notable exceptions. Italian popular banks, for instance, do not have in place any form of mutual support.

  4. 4.

    See also European Central Bank (ECB) (2016), Guide on the approach for the recognition of institutional protection schemes (IPS) for prudential purposes, July.

  5. 5.

    Under Art. 113(6) undertakings included in the scope of IPS are institutions such as financial holding companies or mixed financial holding companies, financial institutions, asset management companies, or ancillary services undertaken subject to appropriate prudential requirements (Art. 113[6] point a). Furthermore, the institutions must be established in the same Member State as the institution. See ECB (2016), Guide on the approach for the recognition of institutional protection schemes (IPS) for prudential purposes, July.

  6. 6.

    The IPSs are different from the solidarity schemes that have long been present in the sector. An IPS is subject to ECB authorization and enjoys more lightened prudential requirements.

  7. 7.

    The counterparties must be established in the same Member State as the institution which applies the 0% risk weight.

  8. 8.

    With the exception of exposures giving rise to Common Equity Tier 1, Additional Tier 1 and Tier 2 items (ECB 2016).

  9. 9.

    As reported in the list of financial conglomerates for the year 2017 published by the Joint Committee of the European Supervisory Authorities. Available at https://esas-joint-committee.europa.eu/Publications/Guidelines/List%20of%20financial%20conglomerates%202017.pdf.

  10. 10.

    In accordance with Art. 49(1) of Regulation (EU) No 468/2014 and of the European Central Bank (ECB/2014/17) (the Single Supervisory Mechanism Framework Regulation), the ECB has direct supervision of significant entities and significant groups. To be considered significant, at least one of the following criteria must be met: (1) the total value of assets above € 30 billion, (2) relevance at the country level, (3) total value of assets above € 5 billion and high cross-border assets/liabilities in more than one other participating Member State; request or granting of funding from the European Stability Mechanism or the European Financial Stability Facility.

References

  • Andrews, K. (1971). The Concept of Corporate Strategy. Homewood: Irwin.

    Google Scholar 

  • Ayadi, R., Schmidt, R. H., Llewell, D. T., Arbak, E., & De Groen, W. P. (2010). Investigating Diversity in the Banking Sector in Europe. In Key Developments, Performance and Role of Cooperative Banks. Brussels: Centre for European Policy Studies.

    Google Scholar 

  • Becht, M., Bolton, P., & Röell, A. (2002). Corporate Governance and Control. European Corporate Governance Institute – Finance Working Paper, 2, 168.

    Google Scholar 

  • Berg, S., & Friedman, P. (1981). Impacts of Domestic Joint Ventures on Industrial Rates of Return: A Pooled Cross Section Analysis. Review of Economics and Statistics, 63, 293–298.

    Article  Google Scholar 

  • Canal, E. G., Lianeza, A. V., & Arino, A. (2003). Effectiveness of Dyadic and Multi-Party Joint Ventures. Organization Studies, 24, 743–770.

    Article  Google Scholar 

  • Coleman, J. S. (1988). Social Capital in the Creation of Human Capital. American Journal of Sociology, 94(supplement), S95–S120.

    Article  Google Scholar 

  • Cuevas, C. E., & Fischer, K. P. (2006). Cooperative Financial Institutions: Issues in Governance, Regulation, and Supervision. Herndon: World Bank Group.

    Book  Google Scholar 

  • Desrochers, M., & Fischer, K. P. (2005). The Power of Networks: Integration and Financial Cooperative Performance. Annals of Public and Cooperative Economics, 76(3), 307–354.

    Article  Google Scholar 

  • Di Maggio, P. J., & Powell, W. W. (1983). The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields. American Sociological Review, 48(2), 147–160.

    Article  Google Scholar 

  • Di Salvo, R. (2002). La “Governance” des Systèmes Bancaires Mutualistes et Coopératifs en Europe. Revue d’Economie Financière, 67, 165–180.

    Article  Google Scholar 

  • Dyer, J. H., & Singh, H. (1998). The Relational View: Cooperative Strategy and Sources of Interorganizational Competitive Advantage. Academy of Management Review, 23, 660–679.

    Article  Google Scholar 

  • Ebers, M. (1999). Explaining Inter-Organizational Network Formation. In M. Ebers (Ed.), The Formation of Inter-Organizational Networks (pp. 3–40). New York: Oxford University Press.

    Google Scholar 

  • Eisenhardt, K. M. (1989). Agency Theory: An Assessment and Review. The Academy of Management Review, 14(January), 57–74.

    Article  Google Scholar 

  • European Association of Co-operative Banks (EACB) (2017). Models of groups and networks of co-operative banks. Retrieved from http://www.eacb.coop/en/co-operative-banks-models-groups-and-networks.html.

  • European Central Bank (ECB). (2016, July). Guide on the Approach for the Recognition of Institutional Protection Schemes (IPS) for Prudential Purposes.

    Google Scholar 

  • Faust, H. (1977). Geschichte der Genossenschaftsbewegung: Ursprung und Aufbruch der Genossenschaftsbewegung in England. In Frankreich und Deutschland sowie ihre weitere Entwicklung im deutschen Sprachraum (3rd ed.). Frankfurt am Main: Fritz Knapp Verlag.

    Google Scholar 

  • Fonteyne, W. (2007). Cooperative Banks in Europe: Policy Issues, WP/07/159. Washington, DC: International Monetary Fund (IMF) Working Paper.

    Google Scholar 

  • Fonteyne, W., & Hardy, D. C. (2011). Cooperative Banks and Ethics: Past, Present and Future. Ethical Perspectives, 18(4), 491–514.

    Google Scholar 

  • Granovetter, M. (1995). Coase Revisited: Business Groups in the Modern Economy. Industrial and Corporate Change, 4, 93–130.

    Article  Google Scholar 

  • Greve, R. (2009). The German Cooperative Banking Group as a Strategic Network. Canadian Journal of Development Studies/Revue Canadienne D’Études du Développement, 29, 1–2, 65–100.

    Google Scholar 

  • Groeneveld, J. M. (2015). Governance of European Cooperative Banks: Overview, Issues and Recommendations. TIAS Working Paper.

    Google Scholar 

  • Gulati, R. (1995). Does Familiarity Breed Trust? The Implications of Repeated Ties for Contractual Choice in Alliances. Academy of Management Journal, 38, 85–112.

    Google Scholar 

  • Gulati, R. (1998). Alliances and Networks. Strategic Management Journal, 19(4), 293–317.

    Article  Google Scholar 

  • Gulati, R., Nohria, N., & Zaheer, A. (2000). Strategic Networks. Strategic Management Journal, 21(3), 203–215.

    Article  Google Scholar 

  • Hellinger, C. (1999). Kernkompetenzbasiertes Outsourcing in Kreditgenossenschaften: Eine transaktionskostenökonomische Analyse unter besonderer Berücksichtigung von Netzwerkstrukturen. Regensberg: Münster.

    Google Scholar 

  • Jarillo, J. C. (1988). On Strategic Networks. Strategic Management Journal, 9(1), 31–41.

    Article  Google Scholar 

  • Jarillo, J. C. (1993). Strategic Networks: Creating the Borderless Organization. Oxford: Butterworth Heinemann.

    Book  Google Scholar 

  • Jensen, R. J., & Szulanski, G. (2007). Template Use and the Effectiveness of Knowledge Transfer. Management Science, 53, 1716–1730.

    Article  Google Scholar 

  • Kay, J. (2006, April 26). The Mutual Interest in Building Trust Still Remains. Financial Times.

    Google Scholar 

  • Klein, S., & Mangan, A. (2005). Stability in Times of Change: A Strength of Co-operatives. In T. Theurl (Ed.), Economics of Inter-Firm Networks (pp. 89–117). Tübingen: Mohr Siebeck.

    Google Scholar 

  • Littlechild, S. C. (1975). Common Costs, Fixed Charges, Clubs and Games. Review of Economics Studies, 42, 117–124.

    Article  Google Scholar 

  • Marin, M. (2016). Organizational Form and Financial Stability: Lessons from Cooperative Banks in the US and UK. Banking and Finance Law Review, 31(3), 513.

    Google Scholar 

  • Menzani, T., & Zamagni, V. (2010). Cooperative Networks in the Italian Economy. Enterprise and Society, 11(1), 98–127.

    Article  Google Scholar 

  • Ory, J., & And Lemzeri, Y. (2012). Efficiency and Hybridization in Cooperative Banking: The French Case. Annals of Public and Cooperative Economics, 83(2), 215–250.

    Article  Google Scholar 

  • Oxley, J. E. (1997). Appropriability Hazards and Governance in Strategic Alliances: A Transaction Cost Approach. Journal of Law, Economics and Organizations, 13, 387–409.

    Article  Google Scholar 

  • Pfeffer, J., & Nowak, P. (1976). Joint Venture and Interorganizational Interdependence. Administrative Science Quarterly, 21(3), 398–418.

    Article  Google Scholar 

  • Picot, A., & Hardt, P. (1998). Make-or-Buy-Entscheidungen. In A. Meyer (Ed.), Handbuch Dienstleistungsmarketing (Vol. 1, pp. 625–646). Stuttgart: Schäffer-Poeschel.

    Google Scholar 

  • Pisano, G. P., Russo, M. V., & And Teece, D. (1988). Joint Ventures and Collaborative Arrangements in the Telecommunications Equipment Industry. In D. C. Mowery (Ed.), International Collaborative Ventures in U.S. Manufacturing (pp. 23–70). Cambridge: Ballinger Pub. Co.

    Google Scholar 

  • Porter, M. (1998). Competitive Advantage: Creating and Sustaining Superior Performance. New York: Free Press.

    Book  Google Scholar 

  • Portes, A. (1998). Social Capital: Its Origins and Applications in Modern Sociology. Annual Review of Sociology, 24, 1–24.

    Article  Google Scholar 

  • Stern, T. (2014). Regulating Liquidity Risks Within “Institutional Protection Schemes”. Beijing Law Review, 5, 210–239.

    Article  Google Scholar 

  • Teece, D. (1992). Competition, Cooperation, and Innovation: Organizational Arrangements for Regimes of Rapid Technological Progress. Journal of Economic Behavior and Organization, 18, 1–25.

    Article  Google Scholar 

  • Uzzi, B. (1997). Social Structure and Competition in Interfirm Networks: The Paradox of Embeddedness. Administrative Science Quarterly, 42, 35–67.

    Article  Google Scholar 

  • Wasserman, S., & Faust, K. (1994). Social Network Analysis: Methods and Applications. Cambridge, UK: Cambridge University Press.

    Book  Google Scholar 

  • Williamson, O. E. (1983). Credible Commitments: Using Hostages to Support Exchange. American Economic Review, 73, 519–535.

    Google Scholar 

  • Williamson, O. E. (1985). The Economic Institutions of Capitalism. New York: Free Press.

    Google Scholar 

  • Williamson, O. E. (1991). Strategizing, Economizing, and Economic Organization. Strategic Management Journal, 12, 75–94.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Università Cattolica del Sacro Cuore, Milano, Italy

    Federica Poli

Authors
  1. Federica Poli
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Federica Poli .

Rights and permissions

Reprints and permissions

Copyright information

© 2019 The Author(s)

About this chapter

Check for updates. Verify currency and authenticity via CrossMark

Cite this chapter

Poli, F. (2019). Co-operative Banking Networks: Rationalities and Models. In: Co-operative Banking Networks in Europe. Palgrave Macmillan Studies in Banking and Financial Institutions. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-21699-3_2

Download citation

  • DOI: https://doi.org/10.1007/978-3-030-21699-3_2

  • Published:

  • Publisher Name: Palgrave Macmillan, Cham

  • Print ISBN: 978-3-030-21698-6

  • Online ISBN: 978-3-030-21699-3

  • eBook Packages: Economics and FinanceEconomics and Finance (R0)

Publish with us

Policies and ethics

Search

Navigation