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Based on a sample of cooperative, savings, and commercial banks from OECD countries, this paper examines whether and to what extent cooperative banks affected average bank soundness during 2001-2010. To account for the impact of the recent financial crisis, we analyse separately the pre-crisis period (2001)(2002)(2003)(2004)(2005)(2006) and crisis years (2007)(2008)(2009)(2010). Unlike published claims that blame the fragility of banking systems on the presence of non-profit-maximising entities, our main finding is that cooperative banks have explanatory power for stabilisation during the crisis years, but only above a certain market share threshold.Source: BankScope database, authors' calculations. 1 In 2010, the CB share in Canada and Japan was equal to 3.49% and to 15.72%, respectively. The market share is calculated as the ratio of the sum of total assets of all cooperative banks in the country to the total assets of all bankscooperatives, savings and commercialin the same country. The values of CB total assets were collected by the European Association of Cooperative Banks (EACB), while the values on the total assets of all banks were collected by the Organisation for Economic Co-operation and Development (OECD). maintain that CBs tend to increase the fragility of their respective financial system. To our knowledge, no empirical work published so far has explored the role of CBs in financial stability while taking into account the recent financial crisis. Moreover, only a limited number of studies focus on an international sample of banks.Given the mixed empirical results in the related literature and consequent stimulus to further investigate the contribution of CBs to bank stability, especially after the onset of the financial crisis, this paper aims to shed some light on the role of CBs, based on a sample of OECD banks over a period that includes the recent financial crisis (2001)(2002)(2003)(2004)(2005)(2006)(2007)(2008)(2009)(2010). Building upon the work of Hesse and Č ihák (2007), we first examine the idiosyncratic stability of the business and governance models adopted by banks, distinguishing between commercial banks, savings banks, and CBs. We successively analyse whether and to what extent CBs impact on average bank soundness, and especially on large banks. Bank stability is proxied by the z-score, a widespread accounting measure Graham, 1986, 1988;Boyd and Runkle, 1993;Maechler et al., 2005; Laeven, 2006, Demirgüç-Kunt andHuizinga, 2010;Beck et al., 2012). To evaluate whether the impact of CBs on banking system resilience changes with varying macroeconomic and financial conditions, the empirical analysis was carried out in both the pre-crisis and crisis periods. The empirical analysis uses a generalised method of moments (GMM) estimator and focuses on bank-specific factors, including a set of dummy variables accounting for the business models adopted by banks, and on a number of country-specific variables.This paper contributes to the literature in several ways. First, to the best of our know...

Bank risk is not directly observable, so empirical research relies on indirect measures. We evaluate how well Z‐score, the widely used accounting‐based measure of bank distance to default, can predict bank failure. Using the U.S. commercial banks’ data from 2004 to 2012, we find that on average, Z‐score can predict 76% of bank failure, and additional set of other bank‐ and macro‐level variables do not increase this predictability level. We also find that the prediction power of Z‐score to predict bank default remains stable within the three‐year forward window.

Using a detailed set of Deposit Insurance Schemes (DIS) features for 27 EU countries, we assess the impact of national deposit insurance features on bank stability and investigate the existence of nonlinearities in the relationship between coverage and bank stability both in crisis and normal times. Our results suggest that more protective DIS do not necessarily lead to greater bank risk. However, during the crisis some features that generate moral hazard incentives can decrease bank stability. We find an inverse U-shaped relation with bank stability decreasing at high levels of coverage during the crisis period. However, our evidence also suggests that the introduction of temporary measures like blanket guarantees are crucial to avoid panic among depositors and restore stability. Finally, our results seem to imply that the stabilizing effect of deposit insurance can be different along the economic cycle, so regulators should consider that to be able to achieve an optimal DIS that minimizes moral hazard incentives a 'dynamic' approach may be necessary.

PurposeThe paper aims to examine whether financial advisors can understand the symbols and meaning that investors associate with money and whether such ability plays any role in enhancing the advisor-investor relationship in terms of satisfaction, level of trust, referral propensity and loyalty.Design/methodology/approach The authors used a dyadic research design. A total of 186 dyads of financial advisors and their clients took part in the study and completed two parallel self-administered questionnaires.Findings The authors found that financial advisors often can detect the emotional associations that their clients attribute to money. Such ability can enhance their relationship with investors.Research limitations/implicationsThe main limitation of this study is its exploratory nature and the convenience sampling technique that was adopted. Therefore, researchers are encouraged to test the main findings further.Practical implicationsThe results have implications for the development of ad-hoc psychological training to enhance the relationship between financial advisors and investors. Understanding the symbolic meanings and the emotions that clients associate with money may be a prerequisite for a financial services company to succeed and be competitive in the sector.Originality/valueDespite acknowledging that money is not a neutral object but is layered with symbolic meanings and emotional associations, the behavioral finance literature has so far neglected to study these implications from either a theoretical or a practical point of view. This paper aims to fill this gap by investigating the symbolic value of money in the financial services industry.