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Contribution Details

Type Working Paper
Scope Discipline-based scholarship
Title Social preference and group identity in the financial cooperative
Organization Unit
  • Christian Ewerhart
  • Robertas Zubrickas
  • English
Institution University of Zurich
Series Name Working paper series / Department of Economics
Number 332
ISSN 1664-705X
Number of Pages 40
Date 2019
Abstract Text We model the financial cooperative as an optimal institution sharing liquidity risks among agents with social preference and group identity. Stronger social concerns imply objectively better (worse) conditions for borrowers (depositors). Testing the model, we find that, indeed, deposit and loan rates offered by U.S. credit unions between 1995 and 2014 co-moved with (i) the number of members, and (ii) the common bond. Our theory explains how cooperatives coexist with banks, and why they have tended to be more resilient. However, the analysis also suggests that financial inclusion and advantages in resilience might quickly evaporate as membership requirements get diluted.
Other Identification Number merlin-id:18361
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Keywords Social preferences, group identity, liquidity insurance, cooperative banking, credit union, common bond, bank competition, resilience, Kreditgenossenschaft, Gruppenidentität, Resilienz, Liquidität