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Is Competition Among Cooperative Banks a Negative Sum Game?

Author

Listed:
  • Paolo Coccorese

    (University of Salerno)

  • Giovanni Ferri

    (LUMSA University)

Abstract
Does ‘inner’ competition – rivalry among network members – worsen performance in a network of cooperative banks? Inner competition might, in fact, endanger network-dependent scale economies. We test our hypothesis on Banche di Credito Cooperativo (BCCs), Italy’s network of mutual cooperative banks. We find a worsening of performance both at incumbent and (even more) at aggressor BCCs when they compete among themselves. Instead, the worsening is mild when BCCs compete with non-BCC comparable banks. 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.

Suggested Citation

  • Paolo Coccorese & Giovanni Ferri, 2017. "Is Competition Among Cooperative Banks a Negative Sum Game?," CERBE Working Papers wpC19, CERBE Center for Relationship Banking and Economics.
    • Handle: RePEc:lsa:wpaper:wpc19
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    References listed on IDEAS

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    4. Cristian Barra & Anna Papaccio & Nazzareno Ruggiero, 2023. "Basel accords and banking inefficiency: Evidence from the Italian local market," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(4), pages 4079-4119, October.

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    More about this item

    Keywords

    Cooperative Banks; Rivalry Among Network Members; Strategic Interactions; Negative Sum Game; Banking Network;
    All these keywords.

    JEL classification:

    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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