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A Financial Performance Comparison of Czech Credit Unions and European Cooperative Banks

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  • Matěj Kuc
  • Petr Teplý

Abstract

This paper empirically assesses the financial performance of Czech credit unions in relation to other European cooperative banks in terms of their profitability and stability. We created a unique dataset of 283 cooperative banks from 15 European countries in the period 2006-2013. Using the system GMM and alternative panel data methods, we reveal worse performance of Czech credit unions in terms of both profitability and stability compared to their European peers. We also argue that big credit unions in the Czech Republic have assumed a non-sustainable business model depending on excessive risk taking while enjoying implicit subsidy via deposit insurance. In conclusion, we argue that under recent capital management policies, big Czech credit unions will likely face serious financial problems in coming years.

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  • Matěj Kuc & Petr Teplý, 2018. "A Financial Performance Comparison of Czech Credit Unions and European Cooperative Banks," Prague Economic Papers, Prague University of Economics and Business, vol. 2018(6), pages 723-742.
    • Handle: RePEc:prg:jnlpep:v:2018:y:2018:i:6:id:682:p:723-742
    DOI: 10.18267/j.pep.682
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    Cited by:

    1. Matěj Maivald & Petr Teplý, 2020. "The impact of low interest rates on banks' non-performing loans," FFA Working Papers 2.002, Prague University of Economics and Business, revised 25 Feb 2020.
    2. Matěj Kuc & Petr Teplý, 2023. "Are European commercial banks more profitable than cooperative banks? Evidence from a low interest rate environment," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(4), pages 4385-4400, October.

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    More about this item

    Keywords

    credit union; cooperative banking; moral hazard; system GMM; Z-Score;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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