Ownership dispersion and performance in cooperative banking

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Abstract

Different methodological approaches and hypotheses relative to the relationship between ownership structure and performances in cooperative banking generate contrasting findings, so motivating this innovative study which is grounded on an estimation approach allowing for the potential endogeneity of the membership base. Based on a sample of 241 Italian small cooperative banks over the 2013–2018 period, we find that bank profitability is positively affected by the membership as in the study conducted by Jones and Kalmi (2015) on Finnish cooperative banking and different from the comparable Austrian empirical research of Gorton and Schmid (1999). Unlike the latter we did not find an increasing exposure to agency costs as ownership dispersion grows and showed that greater membership raises individual bank financial stability, lowering the cost of credit risk.

Keywords: Ownership Structure, Cooperative Banking, Profitability, Financial Stability

Authors’ individual contribution: The Author is responsible for all the contributions to the paper according to CRediT (Contributor Roles Taxonomy) standards.

Declaration of conflicting interests: The Author declares that there is no conflict of interest.

JEL Classification: G210, G320, G340, G380

Received: 27.06.2022
Accepted: 16.09.2022
Published online: 20.09.2022

How to cite this paper: Poli, F. (2022). Ownership dispersion and performance in cooperative banking. Corporate Ownership & Control, 19(4), 111–128. https://doi.org/10.22495/cocv19i4art10