The Power of Customer-owned Banks
Chapter 6: The performance of customer-owned banks during the crisis
How did the banking crisis affect the customer-owned banking sector? There is no magic about the business model. Under the right conditions it can succeed superbly well, but it can also fail. For example, in the Swedish banking crisis of the early 1990s, the cooperative banking sector converted to investor-ownership in order to recapitalise itself (Brunner et al., 2004). In the Spanish banking crisis of the 1980s, the sector suffered the demise of its central bank (Fonteyne, 2007). On the other hand, the Swiss Raiffeisen banks withstood a real estate crisis in the early 1990s better than other banks, the French mutuals suffered less in banking stress during 1980s and 1990s, and before the recent banking crisis the Italian banche popolari and cooperative credit banks had lower loan losses than their competitors (Fonteyne, 2007, p. 26). Immediately after the banking crisis of 2007–08, Lou Hammond-Ketilson and I wrote a report for the International Labour Organisation that found cooperative banks and credit unions had come through remarkably well.
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