How can co‐operative banks spread the spirit of co‐operation in deprived communities?

Abstract

PurposeIn recent years, Japanese co‐operative banks have been attracting new interest among academics and the population generally as institutions through which deprived communities can be revitalized. They have been shown to be capable of promoting both social co‐operation and economical development through the financing of new social enterprises by investments coming mainly from local residents and existing social organizations. This paper aims to address the central questions of what Japanese co‐operative banks can do to encourage co‐operation among local residents and social enterprises so that they willingly invest their money in the development of their local community.Design/methodology/approachIn order to explore these questions, two Japanese co‐operative banks are compared by means of a questionnaire survey and semi‐structured interviews with their investors and boards of directors. The main reason for focusing this investigation on these two banks was that despite the similarity of their political, economical and demographical backgrounds, one of them showed a steady growth in local investment while the other failed to produce a similar level of local engagement.FindingsThe findings of the paper clearly demonstrated that when a co‐operative bank acts as “community organizer”, undertaking tasks which are outside its usual sphere of activities as financier, and its board includes members of the social enterprise sector, its positive impact on community development is more effective. However, it also became clear that a vital feature of this kind of endeavour is the utilization of expertise derived from members of the local community.Originality/valueThe paper makes an important contribution to the understanding of co‐operative banks as community organizers. Its originality lies primarily in the fact that it was the first time that this type of research has been conducted on Japanese co‐operative banks.