Membership and Performance in Finnish Financial Cooperatives: A New View of Cooperatives?

Type of Work

Article

Date

9-2015

Journal Title

Review of Social Economy

Journal ISSN

0034-6764

Journal Volume

73

Journal Issue

3

First Page

283

Last Page

309

DOI

10.1080/00346764.2015.1067753

Abstract

Many economists adopt a critical stance on cooperatives. One example is the claim that larger membership in cooperative banks is detrimental to performance. We re-examine this earlier finding by drawing from a richer and broader conceptual framework than used previously and conclude that in recent years, the relationship between membership and performance may be positive. In our empirical analysis, we use new data for Finnish cooperative banks and, compared to earlier work, develop an alternative measure for membership and employ improved estimation methods. A positive relationship between membership and performance in financial cooperatives is consistently found. We discuss our findings in light of an emerging body of theoretical and empirical work on cooperatives, especially for financial cooperatives, and argue that a new view of cooperatives is warranted.

JEL classification: F21, G34, P13

Hamilton Areas of Study

Economics

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