Mutual and social efficiency of Italian co-operative banks: an empirical analysis

In this study we analyze the concept of efficiency in co-operative banks (CBs) from the points of view of the mutuality and sustainability of business. According to the extant literature, CBs are often less efficient than traditional banks, but the reason for this apparently higher inefficiency is strictly correlated to their statutory commitments. The purpose of this paper is to verify, through an empirical survey of 33 Tuscan “Banche di Credito Cooperativo” (BCC), if a particular type of Italian CB is less or more competitive compared to non-co-operative ones by using and adapting two financial indicators: the financial value added and the cost-income ratio. Our findings show that by implementing appropriate corrections to the value-added indicator and to the cost-income ratio, BCC appear efficient and mission-oriented, with a significantly reduced performance gap in comparison to non-co-operative credit institutions.