Cooperative Banks Research Articles

Are cooperative and commercial banks equally effective in reducing the shadow economy? International evidence

Are cooperative and commercial banks equally effective in reducing the shadow economy? Although theory and evidence indicate that the expansion of the financial system reduces the size of the shadow economy, little is known on the role played by cooperative and commercial banks in shaping the size of the shadow economy. We address this issue using data from 42 developed and developing countries over the 2006–2017 period. For our empirical purposes, Generalized Least Squares (GLS) and Instrumental Variable (IV) estimators have been employed. Evidence indicates that cooperative banks significantly reduce the size of the shadow economy. On the contrary, commercial banks are shown to increase the shadow economy. Consistent with previous literature, while for cooperative banks increased financial outreach encourages small firms to enter the formal sector, thereby reducing the size of the shadow economy, the expansion of commercial banks exacerbates the latter by tightening credit constraints for small firms.

The impact of CBDC on a deposit-dependent banking system

We examine implications of a central bank digital currency (CBDC) for banks using business models particularly dependent on customer deposits. Employing unique customer data hand-collected from German savings and cooperative banks, we generate conversion rates for deposits into a CBDC. Even at moderate conversion rates, most banks would have experienced funding problems and lost profits if a CBDC had been introduced in most years from 2000 onward. Our results are relevant for commercial banks, contributing to better assessments of the impact of CBDCs on liquidity and profitability and help central banks to identify implementation costs for banks within historical and hypothetical interest rate environments.

EFFECT OF DEPOSITS AND NON-PERFORMING LOANS ON BANK PROFITABILITY – A CASE STUDY ON CONVENTIONAL COOPERATIVE BANK OF BARODA REGION

The banking sector plays a vital role in providing essential financial services, facilitating the allocation of funds to productive ventures, and aiding in the implementation of government fiscal and monetary policies. Historically, Non-Performing Assets (NPAs) have posed significant challenges for banks, but reducing NPAs has now become a top priority. The strength of a nation's economy relies heavily on the health of its cooperative banking sector. This study analyzes the non-performing assets (NPAs) of The Pragati Co-operative Bank Ltd. over a six-year period from 2017-18 to 2022-23. The research examines various aspects related to NPAs, including gross NPAs, net NPAs, provisions made towards NPAs, loans and advances, deposits, and relevant ratios such as net NPA ratio, provision coverage ratio, and credit-to-deposit ratio. The data analysis reveals that the bank maintained a zero net NPA throughout the period, indicating effective provisioning strategies. While gross NPAs fluctuated, the provision coverage ratio remained strong, suggesting the bank's ability to withstand asset quality pressures. The study also investigates the relationship between gross NPAs and net profits using correlation and regression analysis, finding a positive correlation but minimal significant impact of gross NPAs on profitability. Overall, the research highlights The Pragati Co-operative Bank Ltd.'s proactive approach to NPA management, financial stability, and adaptability to changing market conditions.

Review Paper- A Study of Credit Management Policies and Loan Disbursement Operations of Co-operative Bank

This study is conducted to know Credit Policy and Loan Disbursement Operations of Co- operative Bank. Co-operative bank provides variety of credit facilities as per customer’s needs. This facilitates can be for short term or loan term. The loan growth and performance of bank is required level or not it is also assessed in this study. This study confirms that Co- operative bank should maintain a good relation with its customers to increase the profitability. To increase total number of borrowers the bank should provide all the necessary information to their customers and should provide attractive rate of interest. KEYWORDS Banking guide, Credit Term, Interest, Credit Period, Credit Policy, Collateral, Capacity, Margin, Credit Limit

A Study of Satisfaction Level of Current Account Holders of Akola Urban Co-Operative Bank

Cooperative banks are witnessing steady growth and development, playing a crucial role in promoting financial inclusion, a cornerstone of economic and national advancement. These banks are particularly instrumental in supporting micro and small enterprises in their business endeavors. Renowned for their customer-centric services, cooperative banks contribute significantly to the financial landscape. This research paper focuses on The Akola Urban Co-operative Bank Ltd., analyzing the overall satisfaction levels of its current account holders. Utilizing various statistical tools, the study delves into understanding customer satisfaction across different banking facilities such as overdrafts, RTGS/NEFT, demand drafts, and more. Furthermore, the paper emphasizes the importance of raising awareness about the services offered by cooperative banks. Customer feedback and recommendations are explored, highlighting areas for potential improvement, notably the enhancement of the bank's mobile banking services.

Does Fair Value Taxation Affect Banks’ Investment Portfolios and Risk Taking?

ABSTRACT We analyze the implications of including fair value changes in taxable income on banks’ asset allocation and risk taking. Exploiting variation in fair value tax regimes and tax rates across 27 countries from 2010 to 2018, we find that fair value taxation is associated with banks’ investment portfolio choices and risk taking. On average, banks hold fewer fair-value taxed securities when fair value taxes increase. This effect is pronounced for savings and cooperative banks. Further, the effect is pronounced for banks that report under local GAAP for tax purposes. Our results also suggest that banks instead invest more in securities that are not taxed at fair value. Lastly, we provide evidence that the risk taking of savings and cooperative banks is positively associated with the tax rate when subject to fair value taxes. In addition, banks that report under local GAAP increase risk taking when subject to fair value taxes. Data Availability: Data are available from the sources cited in the text. JEL Classifications: G21; G28; H25; M41.

MARKET RESEARCH SERVICES OF BANKS AND THEIR IMPACT ON PERCEPTION OF SERVICE USERS

Banks are still playing a very important role in our nation's economic development. They play an important role in the promotion of industry and commerce. The general aim of banks is to provide the peoples with monetary services, including business for their different plans. In India, the bank covers private banks, and the public banks, international banks, rural regional banks, and cooperative banks. They receive customer-term securities. Most banks have trained components to handle the financial requirements of short-scale industrial units in an organizational arrangement. Banking is a very complex, but exciting topic because it involves knowledge of economics, sociology, psychology, the essence of marketing, and banking concepts. It is the customer with the highest degree of influence in marketing. The motto of effectively selling bank goods is a in a technical and traditional manner to meet the needs of the customers. Bank, therefore, need to incorporate additional research and market intelligence to promote innovation to ensure the loyalty of customers and as well as to be aware of improvements market conditions (Ojha, V.K, 2004

Інституційне середовище банківської підтримки розвитку малого підприємництва в україні

The article is devoted to the study of the evolution of the formation of the institutional environment for the functioning of small businesses in Ukraine and the development of proposals for its improvement to stimulate bank support in the field of small business. The regulatory and legal basis for developing small entrepreneurship has been staged. A portrait profile of a small business entity in Ukraine has been created. A scheme of interaction of state institutions supporting small entrepreneurship by supplementing its infrastructural block with new institutional units has been developed. Within the framework of the existing infrastructure, it is proposed to create a Bureau of credit histories of small business entities and a Unified platform for financing small business development. The priority directions for optimizing regulatory and legal support for small businesses are substantiated. The following are defined as control points for the regulation of small entrepreneurship: approximation of business management and regulation standards to EU standards; development of financial instruments alternative to lending; digitization of financial services, etc. It is essential to direct regulatory efforts in regulating alternative banks’ activities to support financial market intermediaries (fintechs, microfinance organizations, leasing and factoring companies) and diversify funding sources (factoring, crowdfunding). Stimulating the development of microcredit in Ukraine requires a comprehensive approach, the components of which can be simplifying the mechanism of obtaining microcredit, creating conditions for the development of non-bank financial institutions, improving the legislative provision of bank microcredit, state incentives for banks to expand micro- and other types of lending; creation of cooperative banks specialized in lending to small businesses; state support for microcredit information programs; reduction of the tax burden and improvement of investment and credit support mechanisms for small businesses; expansion of the list of state preferential lending programs for small enterprises; gradual increase in the volume of microcredit to support start-ups; expanding the use of digital financial technologies. Keywords: small business, institutional environment, banking support, regulatory and legal support.

Competition, Survival Issue, and Performance Constraints of Banks: Evidence from Ethiopian Private Commercial Banks

Banks are financial institutions that are crucial to the accomplishment of development objectives because they transfer money from surplus to deficit parties. This study examines the competition, survival, and performance constraints of commercial banks in Ethiopia using the DEA and CAMEL frameworks from 2015 to 2020. The nonparametric (DEA) approach was applied to approximate the overall technical efficiency score of the banks under consideration. The empirical study used twelve private commercial banks operating in Ethiopia, excluding four banks because of a lack of appropriate and audited financial data and no risk assessment between the study periods. The result of the study reveals that under CRS, except for Abyssinia, Anbesa, and Nib International Banks, the remaining banks are more efficient. Under VRS, while Abyssinia Bank was less efficient, other banks were found to be more efficient. Under scale efficiency, Abyssinia, Anbesa, and Nib International Banks were found to be less efficient, while the remaining banks were more efficient. The composite ranking of the CAMEL framework portrays that Awash International Bank, Zemen, and Wegagen Banks were found in the top three ranks, while Cooperative Bank of Oromia, Dashen, and Abyssinia Banks were found in the bottom position. The regression result demonstrates that the ratios of total capital to total assets, loans to assets, total loans to total deposits, and CAR have a positive effect on bank profitability, whereas the ratio of total loans to the number of branches has a statistically negative and significant influence on the return on assets.

Financial inclusion in India: How far do grassroots institutions matter?

AbstractThough the relevance of grassroots institutions for financial inclusion (FI) is widely recognised, we still do not fully understand its differential effect on FI, particularly in relation to commercial banks. To investigate this issue, we consider the household's moneylender dependence as an indicator of financial exclusion and thus our outcome variable. Further, we have developed FI indices using indicators of commercial and cooperative banks, which we used as explanatory variables in our analysis. Our results show that, while there is a decreased dependence on moneylenders even at low levels of FI through cooperatives, commercial banks show an inverted U‐shaped relationship implying a decreasing effect only after a threshold level.

Evaluating Technical and Scale Efficiencies of Cooperative Banks in Jammu and Kashmir

This article examines the performance of cooperative banks in Jammu and Kashmir (J&K) during 2005–2018. We use data envelopment analysis (DEA) methodology to obtain technical and scale efficiency scores for each bank over the years. Income-based approach has been employed while selecting our inputs and outputs. Our results indicate a large asymmetry as far as the performance across different banks is concerned. The dominant source of the technical inefficiency in the cooperative banks is found to be scale related. Further, the results from returns to scale suggest that majority of the cooperative banks in J&K are operating on the zone of decreasing returns to scale.

Study of loans distributed by District Cooperative Bank and Cooperative Agriculture and Rural Development Bank

The basic principle of cooperation is- “One for all and all for one”. An institution formed with the spirit of cooperation is called a cooperative society. A cooperative society is a voluntary organization of people who meet each other for the purpose of helping each other. The nature of this society is socio-economic. World famous thinker Plato has said “Our own good lies in the good of others”. Therefore, the members of the cooperative society help each other on the basis of savings and investment. Its members are generally economically weak and middle-class people. The bank which is established with the contribution of these members is called a cooperative bank. Abstract in Hindi Language: सहकारिता का मूल सिद्धान्त है- ‘‘एक सबके लिए और सब एक के लिए’’। सहकारिता की भावना से बनी संस्था सहकारी समिति कहलाती है। सहकारी समिति व्यक्तियों का ऐसा ऐच्छिक संगठन है जो एक-दूसरे की सहायता के उद्देश्य से आपस में मिलते हैं। इस समिति की प्रकृति सामाजिक-आर्थिक होती है। विश्व प्रसिद्ध चिन्तक प्लेटो ने कहा है ‘‘दूसरों की भलाई में स्वयं अपनी भलाई निहित है’’। अतः सहकारी समिति के सदस्य बचत और विनियोग को आधार मानकर एक-दूसरे की सहायता करते हैं। इसके सदस्य साधारण रूप में आर्थिक रूप से कमजोर और मध्यम वर्ग के लोग होते हैं। इन सदस्यों के अंशदान से जिस बैंक की स्थापना होती है उसे सहकारी बैंक कहते हैं। Keywords: मुद्रा एवं वित्तीय प्रणालियाँ

A Study on Agricultural Loans offered by NABARD to Farmers

This study delves into the comprehensive landscape of agricultural loans disbursed by the National Bank for Agriculture and Rural Development (NABARD) to farmers in India. The research scrutinizes the varied purposes for which these loans are extended, encompassing crop cultivation, animal husbandry, dairy farming, poultry, fisheries, and agro-processing. Emphasizing the different loan types – short-term, medium-term, and long-term – the investigation explores the interest rates associated with each category and evaluates the role of government subsidies in enhancing affordability. Additionally, the study investigates the credit delivery mechanism facilitated by NABARD through cooperative banks, regional rural banks, and commercial banks, ensuring an inclusive approach to reach farmers across diverse strata. The research underscores the technological impetus provided by NABARD, encouraging farmers to adopt modern agricultural practices and technologies. Special attention is given to risk mitigation measures, including crop insurance, designed to shield farmers from losses arising due to unforeseen circumstances. Keywords: NABARD, Agricultural Loans, Farmer Financing, Credit Delivery, Government Subsidies, Rural Development, Risk Mitigation, Financial Inclusion, Technological Adoption, Indian Agriculture.

Peran Kerja Sama Perbankan Dengan Koperasi Unit Desa (KUD) Karya Baru Desa Teluk Tigo Kecamatan Cermin Nan Gedang Kabupaten Sarolangun

This research aims to determine the role of banking cooperation with cooperatives and the obstacles to the role of banking cooperation with the Karya Baru village unit cooperative (KUD), Teluk Tigo Village, Cermin Nan Gedang District, Sarolangun Regency. This thesis uses qualitative research methods, the data sources used are primary and secondary data sources with data collection techniques and instruments through observation, interviews and documentation. The research results show that this cooperative collects funds from its members in the form of mandatory savings, principal savings and voluntary savings. However, in carrying out cooperative activities, the cooperative management has not yet collaborated between the bank and the cooperative. The role of banking in this case is simply a place to store money for the administrators of the Karya Baru Village Unit Cooperative (KUD) in Teluk Tigo Village. There are no mutual benefits provided by either the cooperative or the banking sector, so members continue to withdraw money/borrow money through the cooperative in cash. One of the factors supporting the achievement of the goals of a program is its implementation. If the implementation of a program is good and on target, then the program can also have an impact on society. However, in this case the obstacle faced by the cooperative management is the lack of understanding of the management so that the cooperative being run is not very optimal so that the community does not have confidence in its management.

The Development of the Cooperative Banking Sector in Selected Central and Eastern European Countries

The study assesses the development of the cooperative banking sector in selected Central and Eastern European (CEE) countries against the average statistics of the segment in those countries. It also compares it to the largest European cooperative banking group in Germany. The article presents the results of an analysis of the cooperative banking sectors between 2016 and 2021 in Poland, Bulgaria, Romania, Hungary and Germany, all of which are members of the European Association of Cooperative Banks (EACB). The selection criterion was based on the availability of detailed data on cooperative banks published by the EACB on a temporal and spatial basis.
 The empirical basis for the issues addressed in the article is a review of the reference literature and the comparative analysis of the development of the cooperative banking sector using a synthetic development indicator for the period 2016–2021. According to the theoretical and empirical analysis, Romania demonstrates the lowest level of development of the cooperative banking segment. In turn, the Polish and Bulgarian cooperative banking sectors represents a higher level of development than the Romanian one. Hungary has reached the highest level of development in the group of Central and Eastern European countries. While comparing the CEE countries to the German cooperative banking sector, their development was almost one and a half times lower and, in the case of Romania, three times lower.

Determinants of Asset Value Adjustments: The Case of Germany’s Cooperative Banks

Abstract This paper studies the driving forces behind asset value adjustments in the German cooperative banking sector. Firm-specific as well as macroeconomic factors are considered. We estimate a Vector Error Correction Model for the post-unification period from 1992 to 2022. The main factor behind the improvement in value adjustments is the declining long-term interest rate. Besides these macroeconomic factors, the average bank size and the loans-to-deposits ratio are important. The trend towards larger banks has counteracted the improvement as well as the more loan-oriented business strategy of recent years. JEL classification numbers: C580, C58, G21, P13, P34. Keywords: Cooperative Banks, Asset Value Adjustments, Mergers, Vector Error Correction Model.

Influence of remuneration on organizational performance in co-operative banks in Kiambu, Kenya.

Influence of remuneration on organizational performance in co-operative banks in Kiambu, Kenya.

Unravelling the Urban Co-operative Bank Crisis in India examining the Socio-economic and Psychological Impact on Customers

The Urban Co-operative Bank (UCB) crisis has emerged as a significant challenge in the financial landscape. This study aims to unravel the complexities of the crisis, focusing on its origins, progression, and the subsequent repercussions on both a socio-economic and psychological level for the bank's customers. The research employs a multi-dimensional approach to analyze the extent and nature of the crisis. Financial data, regulatory reports, and customer interviews will be utilized to assess the economic impact, including financial losses, disrupted transactions, and potential long-term financial consequences for the affected individuals. Utilizing psychological surveys and interviews, the research seeks to uncover the emotional and mental health implications of financial uncertainty, loss, and disrupted trust in financial institutions. Understanding the psychological dimensions is crucial for designing effective interventions and support mechanisms for affected individuals.

Regional cooperative banks, ecosystems and small and medium-sized enterprise financing: the importance of cognitive, social and geographic proximities

PurposeThis study analyzes the role of regional cooperative banks in identifying and financing small and medium-sized enterprises (SMEs) from a proximity perspective. Access to finance is a major challenge for SMEs. Regional cooperative banks can remove this barrier based on cooperative bank's characteristics and geographic proximity to SMEs. Understanding the interplay between these financial actors and firms can contribute to a better support of SMEs development.Design/methodology/approachThe results are based on a case study of eight SMEs located in southwestern France. Interviews were conducted with two regional cooperative funds and eight SMEs. The interview guide included questions related to the company, the projects financed and how financing was accessed.FindingsResults reveal that a combination of three forms of proximity allows regional cooperative banks and SMEs to establish effective financing operations. They show that regional cooperative banks are key players in the existing financing mechanisms for SMEs. Such financing is often used to gain access to larger players at a later stage. The findings suggest the need for public policies that promote the integration of financing actors in regional ecosystems to advance SMEs' development.Originality/valueThis article examines how SMEs access financing, with a focus on regional cooperative banks, which have received little attention in the literature. Moreover, the relationships between these actors are studied through the lens of proximity. Regional cooperative banks are able to finance projects that may have been overlooked by traditional banks due to trust-building local dynamics.

Local banking development and SME conservative financing policy. Does bank branch density matter?

AbstractDoes bank branch density matter for the conservative financing puzzle? This paper looks at the importance of nearby physical banking services to the decision to eschew debt among SMEs. Our multivariate logistic models rely on recent information from Portugal, a small open bank-based European economy, and control for firm-level and municipality-level effects. We show that banks' branch density at the municipality level increases the odds of local SMEs following a conservative financing policy. However, the weight of local cooperative bank branches relates negatively to the odds of not using debt. Several robustness checks concerning sampling procedures, estimation methods, and variables’ definitions corroborate our baseline results. Moreover, our results show that the effect of bank branches on the decision to eschew debt is economically more relevant for the long-term than the short-term debt.