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Cooperative banks: more risky business? A study of bank risk between cooperative and commercial banks in France, Germany, Italy and Spain.

Smusin, Sebastian LU (2023) NEKN01 20231
Department of Economics
Abstract
The aim of this thesis is to investigate the difference between cooperative banks and commercial banks regarding risk. The data set consists of 189 banks from France, Germany, Italy and Spain between the years 2013 and 2021. Three risk variables were discussed and the first is the Z-score. The two other variables are connected to non-performing loans which are loan loss reserve to non-performing loans and non-performing loans to loan gross. Three hypotheses were set up, one for each risk variable. The main method used was a two-step system GMM. To further investigate the relationship, the time fixed effect and pooled OLS was further conducted. The result regarding the Z-score was somewhat in line with previous literature and showed that... (More)
The aim of this thesis is to investigate the difference between cooperative banks and commercial banks regarding risk. The data set consists of 189 banks from France, Germany, Italy and Spain between the years 2013 and 2021. Three risk variables were discussed and the first is the Z-score. The two other variables are connected to non-performing loans which are loan loss reserve to non-performing loans and non-performing loans to loan gross. Three hypotheses were set up, one for each risk variable. The main method used was a two-step system GMM. To further investigate the relationship, the time fixed effect and pooled OLS was further conducted. The result regarding the Z-score was somewhat in line with previous literature and showed that cooperative banks take less risk. Loan loss reserve to non-performing loans was insignificant regarding the GMM, time fixed effect and pooled OLS. Non-performing loans to loan gross showed in the GMM a positive relationship with the cooperative dummy which is not in line with previous literature and what was expected. The pooled OLS showed the opposite, indicating an indecisive association. These results may depend on the economic expansion period combined with low interest rates. However, further research is needed. (Less)
Please use this url to cite or link to this publication:
author
Smusin, Sebastian LU
supervisor
organization
course
NEKN01 20231
year
type
H1 - Master's Degree (One Year)
subject
keywords
Cooperative banking, Bank risk, Z-score, non-performing loans, loan gross, loan loss reserve
language
English
id
9120344
date added to LUP
2023-09-12 15:38:29
date last changed
2023-09-12 15:38:29
@misc{9120344,
  abstract     = {{The aim of this thesis is to investigate the difference between cooperative banks and commercial banks regarding risk. The data set consists of 189 banks from France, Germany, Italy and Spain between the years 2013 and 2021. Three risk variables were discussed and the first is the Z-score. The two other variables are connected to non-performing loans which are loan loss reserve to non-performing loans and non-performing loans to loan gross. Three hypotheses were set up, one for each risk variable. The main method used was a two-step system GMM. To further investigate the relationship, the time fixed effect and pooled OLS was further conducted. The result regarding the Z-score was somewhat in line with previous literature and showed that cooperative banks take less risk. Loan loss reserve to non-performing loans was insignificant regarding the GMM, time fixed effect and pooled OLS. Non-performing loans to loan gross showed in the GMM a positive relationship with the cooperative dummy which is not in line with previous literature and what was expected. The pooled OLS showed the opposite, indicating an indecisive association. These results may depend on the economic expansion period combined with low interest rates. However, further research is needed.}},
  author       = {{Smusin, Sebastian}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Cooperative banks: more risky business? A study of bank risk between cooperative and commercial banks in France, Germany, Italy and Spain.}},
  year         = {{2023}},
}