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Forum | Papers » The role of cooperative banks in mitigating systemic risk

The role of cooperative banks in mitigating systemic risk

Vincenzo Pacelli, Francesca Pampurini, Anna Grazia Quaranta
June 2020 - n. 6
Keywords: Banche cooperative, rischio sistemico
Jel codes: G21, G28

The world of cooperative banks in the aftermath of the 2008 global crisis has been analyzed by many scholars. In this paper we investigated whether, although they are not systemic banks, they are actually less involved than others in the mechanisms underlying the propagation and accentuation of systemic risk and, therefore, whether their significant presence, acting as a buffer, can mitigate its extent.This is due to various reasons: they are less interrelated with the different sources of transmission of systemic risk, have a relational business model and on average are less exposed to the probability of having difficulties that can infect the other actors of the economic and financial system.We observed a group of banks operating in the Euro Area in the period 2015-2018, divided over the years into homogeneous groups based on the key variables of systemic risk. Variables able to measure, on the one hand, the speed and the ability to transmit problems between the various units of a system and, on the other hand, their state of health. It has become clear that cooperative banks are more present in groups where indicators indicate that the likelihood of contributing to the spread and generation of systemic risk is lower.

 

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