The quality of bank capital in cooperative banks: lessons from history and the current financial crisis

The chapter aims to assess whether banks oriented to a stakeholder perspective—such as co-operative banks—can be considered a positive example of sustainable finance and whether they are more resilient, particularly during periods of turmoil. Taking an historical perspective, the analysis will first identify and discuss the critical success factors that have always been characteristic of sound and sustainable co-operative banks. Second, from a bank capital management perspective, and building upon the historical survey, the chapter will focus on the features of credit policies and capital management, which are typical of co-operative banks. Such features have evolved after the introduction of new international guidelines for bank capital regulation and prudential supervision (after the Basel II and Basel III Frameworks). The chapter intends to verify whether co-operative banks’ specificities may have made them weaker or stronger in the new regulatory and market environment, with a focus on credit performance and capital adequacy of co-operative banks in Italy.