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Is Competition Among Cooperative Banks a Negative Sum Game?

Paolo Coccorese () and Giovanni Ferri

No wpC19, CERBE Working Papers from CERBE Center for Relationship Banking and Economics

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.

Keywords: Cooperative Banks; Rivalry Among Network Members; Strategic Interactions; Negative Sum Game; Banking Network (search for similar items in EconPapers)
JEL-codes: D47 G21 G34 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2017-03
New Economics Papers: this item is included in nep-ban, nep-com, nep-eff and nep-gth
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