Handbook of Critical Issues in Finance
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Handbook of Critical Issues in Finance

Edited by Jan Toporowski and Jo Michell

This vital new Handbook is an authoritative volume presenting key issues in finance that have been widely discussed in the financial markets but have been neglected in textbooks and the usual compilations of conventional academic wisdom.
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Chapter 9: Cooperative banking

Panu Kalmi


The aim of this chapter is to describe the main ideas behind cooperative banking and how they are manifested in the two principal embodiments of these ideas, cooperative banks and credit unions. I exclude certain important topics, notably financial cooperatives that concentrate on housing finance (mutual savings and loans in the USA and building societies in the UK). These have a different origin than the financial cooperatives discussed here. They have also lost their market share drastically both in the UK and the USA since the 1980s following the financial liberalization measures, conversions and financial crises. I also do not discuss many studies on comparing the performance of cooperative banks with commercial banks, or studies explicitly focusing on their behaviour. 1 Concerning credit unions, Ferguson and McKillop (1997) have proposed a useful typology of credit union movements into nascent, transition and mature movements. Characteristic of a nascent movement is the small size of credit unions, the existence of a strong common bond of members, the limited range of services, lacking or imperfect deposit insurance, and an emphasis on voluntarism.

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