Publication detail

A Financial Performance Comparison of Czech Credit Unions and European Cooperative Banks

Author(s): Mgr. Matěj Kuc ,
prof. PhDr. Petr Teplý Ph.D.,
Type: Articles in journals with impact factor
Year: 2018
Number: 0
ISSN / ISBN: ISSN 1210-0455 (print), ISSN 2336-730X (online)
Published in: Prague Economic Papers, Czech Republic
Publishing place: Prague
Keywords: credit union, cooperative banking, moral hazard, system GMM, Z-Score
JEL codes: C23, G21, L25
Suggested Citation: Kuc, M., Teplý, P. (2018). A Financial Performance Comparison of Czech Credit Unions and European Cooperative Banks. Prague Economic Papers, Vol. Vol. 27 No. 6, pp. 723-742. https://doi.org.10.18267/j.pep.682
Grants: GACR 15-00036S Credit Risk Modeling for Financial and Commodity Assets Portfolios GAUK 105815 (2015 - 2017) Banking fee and commission income – its determinants and impact on bank’s profitability and risk GAUK No. 488317 - Performance of cooperative banking in the Czech Republic and other EU member states VŠE IP100040
Abstract: This paper empirically assesses the financial performance of Czech credit unions in relation to other European cooperative banks in terms of their profitability and stability. We created a unique dataset of 283 cooperative banks from 15 European countries in the 2006–2013 period. Using system GMM and alternative panel data methods, we reveal worse performance of Czech credit unions in terms of both profitability and stability compared to their European peers. We also argue that big credit unions in the Czech Republic has undertaken a non-sustainable business model depending on excessive risk taking while enjoying implicit subsidy via deposit insurance. In conclusion, we argue that under recent capital management policies, big Czech credit unions will likely face serious financial problems in coming years.
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