Profit Versus Non Profit: A Third Way? The Case of the Italian Mutual Cooperative Banks.

Catturani, Ivana and Trento, Sandro (2010) Profit Versus Non Profit: A Third Way? The Case of the Italian Mutual Cooperative Banks. UNSPECIFIED.

PDF - Full Text
Download (545Kb) | Preview


    The traditional distinction between profit and non profit firms does not necessarily apply to some types of cooperative firms, such as the Italian mutual cooperative banks (MCBs). These MCBs present a peculiar governance structure, a combination between a public company governance model and a non-profit one. Similarly to a “not for profit organization”, the ownership of the MCBs is widely diffused among borrowerowners, but dividends are not typically redistributed. Like in “public company bank”, MCBs have a spread ownership and a board of directors. MCBs work in order to maximise social utility rather than profits, as a social entrepreneurship. MCBs represent a kind of third way governance model in the financial sector. The board of directors of a MCB acts as a public-good administrator in deciding on how to invest, with a deep impact on the local community. However, the governance of these banks is affected by structural problems. The mutual and co-operative nature of these banks is challenged by the increase in the number of members-owners and in the heterogeneity of the member-owners group. This study aims at investigating the democratic voting mechanism of the board (one-head one-vote) and its appropriateness given enlargement of the member’s community. The research would tackle the issue of governance structure and incentive to efficient behavior.

    Item Type: Departmental Technical Report
    Department or Research center: Computer and management sciences
    Subjects: H Social Sciences > HG Finance
    H Social Sciences > HD Industries. Land use. Labor > HD0062.6 Nonprofit Organizations
    Uncontrolled Keywords: cooperative firm, mutualism, cooperative banks, corporate governance, italian banking sector
    Report Number: DISA Working Paper 2010/03
    Repository staff approval on: 10 Aug 2010

    Actions (login required)

    View Item