## Cooperative Banks in Europe—Policy Issues

_IMF Working Papers, July 1, 2007_

## Source details

**Canonical URL:** [Cooperative Banks in Europe—Policy Issues](https://www.imf.org/en/publications/wp/issues/2016/12/31/cooperative-banks-in-europe-policy-issues-21047)

## Other formats

- [Markdown version](/en/publications/wp/issues/2016/12/31/cooperative-banks-in-europe-policy-issues-21047/index.md)
- [Structured JSON version](/en/publications/wp/issues/2016/12/31/cooperative-banks-in-europe-policy-issues-21047/index.json)
- [Bundle manifest](/en/publications/wp/issues/2016/12/31/cooperative-banks-in-europe-policy-issues-21047/bundle-manifest.json)

## Bibliographic details
- Authors: Wim Fonteyne
- Published: July 1, 2007
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451867237.001

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### Summary
- The paper explains the continuing success of European cooperative banks through evolving comparative advantages.
- A cooperative is described as built around an intergenerational endowment without final owners, creating particular governance challenges.
- Key risks identified include:
  - Use of the endowment for purposes other than members' best interest, such as empire-building.
  - Attempts at appropriation of the endowment.
- The paper notes mechanisms that reinforce the risk of empire-building:
  - Mechanisms that foster capital accumulation.
  - Asymmetric opportunities for consolidation.
- Conclusions:
  - Some form of independent external oversight of corporate governance is warranted.
  - Cooperatives need mechanisms enabling them to better manage their capital.

### Risks and Corporate Governance Challenges
- Governance challenge root: intergenerational endowment without final owners.
- Specific risks and reinforcing mechanisms:
  - Empire-building driven by internal incentives and capital accumulation mechanisms.
  - Appropriation attempts against the endowment.
  - Asymmetric consolidation opportunities that can skew incentives and outcomes.

### Policy Implications and Recommendations
- Independent external oversight of corporate governance is recommended.
- Cooperatives require mechanisms to improve capital management.

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## Content in this bundle

- **Cooperative Banks in Europe, Policy Issues; Wim Fonteyne; IMF Working Paper 07/159; July 1, 2007**
  - [Cooperative Banks in Europe, Policy Issues; Wim Fonteyne; IMF Working Paper 07/159; July 1, 2007 (Markdown version)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2007/_wp07159.pdf.md){rel="alternate" type="text/markdown"}
  - [Cooperative Banks in Europe, Policy Issues; Wim Fonteyne; IMF Working Paper 07/159; July 1, 2007 (PDF)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2007/_wp07159.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/cooperative-banks-in-europe-policy-issues-21047_