Is competition among cooperative banks a negative sum game?. Issue 4 (18th February 2019)

• Record Type: Journal Article
• Authors: Coccorese, Paolo; Ferri, Giovanni
• Is Part Of: Journal of institutional economics. Volume 15:Issue 4(2019)
• Page Start: 673
• Page End: 694
• Publication Date: 2019-02-18
• Subjects: Cooperative banks, -- rivalry among network members, -- strategic interactions, -- negative sum game; Institutional economics -- Periodicals; 330.1552
• DOI: 10.1017/S1744137419000043
• Languages: English
• ISSNs: 1744-1374

Abstract

Abstract: Does 'inner competition' – rivalry among network members – worsen performance in a network of cooperative banks? By weakening the functionality of the network, inner competition might, in fact, endanger network-dependent scale economies. Testing our hypothesis on Italy's network of mutual cooperative banks (Banche di Credito Cooperativo – BCCs), we find a worsening of performance of both incumbents and (even more) aggressors when BCCs compete among themselves. However, the worsening is mild when BCCs compete with comparable non-mutual banks external to the BCC network. We conclude that inner competition among cooperative banks is a negative sum game and, thus, limiting it would be desirable to preserve the stability of cooperative banking networks.