New CERMi Working Paper by SOCENT researchers Anaïs Périlleux and Annabel Vanroose available on-line
A new CERMI-CEB working paper, entitled “Are financial cooperatives crowded out by commercial banks in the process of financial sector development?”, by SOCENT researchers Anaïs Périlleux and Annabel Vanroose and Bert D’Espallier is now available for download. The article is forthcoming in Kyklos.
This paper investigates whether financial cooperatives are crowded out by commercial banks in the process of financial sector development. The authors use a self-constructed database (1990-2011) on financial cooperatives in 55 developing countries. Their empirical results are threefold. First, financial cooperatives tend to reach more members in countries where the commercial banking sector is weak; this validates their role as a market failure solution. Secondly, in the process of commercial bank expansion, financial cooperatives run the risk of being crowded out. Thirdly, financial cooperatives seem to benefit from some kind of bank presence, especially as far as savings mobilization is concerned.