The Theoretical Background of Co-operative Banking

Does co-operative banking constitute a viable alternative to the prevailing joint-stock model of modern times? This chapter examines the role of the co-operative movement from the early credit co-operatives, established by the founding fathers Schulze-Delitzsch and Raiffeisen in famine-struck nineteenth-century Germany, to the complex and hybrid iterations of the model in contemporary European economies. It outlines co-operative banking’s historical roots, with its groundbreaking practices of self-help, solidarity between members and financial inclusion irrespective of social condition or wealth, its ongoing conceptualization, the principles and values associated with co-operative banking, its role in modern economies, and examines empirical evidence on the performance of the sector relative to commercial alternatives and its contribution to financial stability in the European context.