The Effects of the Financial Crisis on Cooperative Banks in Europe – A Critical Comparison –

Klaus Henselmann, Dominik Ditter and Philipp Lupp

No 2016-1, Working Papers in Accounting Valuation Auditing from Friedrich-Alexander University Erlangen-Nuremberg, Chair of Accounting and Auditing

Abstract: The financial crisis has highlighted the necessity of discussions on the adequacy of banking regulation and accounting standard-setting for financial institutions. We compare the development of several variables in this context between commercial banks, cooperative banks and savings banks from 2005 through 2013, in order to investigate whether smaller banks such as cooperative banks or savings banks tended to be more robust to the financial crisis. We find that the volume of lending (loan loss provisioning) remained stable or increased (decreased) for smaller financial institutions. Furthermore, there is no significant increase in loss avoidance behavior specifically for cooperative banks. Cooperative banks are also the group of banks that showed the least pro-cyclical effects and the most income smoothing behavior. Our results suggest that cooperative banks were the group of banks being most stable during the years surrounding the financial crisis in 2007/2008. This demonstrates the importance that policy makers consider the broad range of financial institutions for discussions on policy adjustments.

Keywords: Cooperative Banks; Financial Crisis; Loan Loss Provisioning; IFRS (search for similar items in EconPapers)
JEL-codes: G18 G21 G28 M41 M48 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-acc, nep-ban and nep-hme
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:fauacc:20161

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