What’s important for relationship management? The mediating roles of relational trust and satisfaction for loyalty of cooperative banks’ customers

Building on the corporate reputation model, this study investigates the drivers of customer-based corporate reputation. We consider two corporate reputation dimensions (i.e., the cognitive dimension competence and the affective dimension likeability, and their effects on customer satisfaction and loyalty). Adapting the model to the banking sector, we theoretically extend this model by reasoning that customer satisfaction and relational trust are mediators of the relationship between the two corporate reputation dimensions and loyalty. Studying a sample of 675 customers and members of cooperative banks in Germany, we find perceived attractiveness to be the most important driver of corporate reputation. Furthermore, we confirm a positive relationship between corporate reputation and loyalty, and a mediating effect of both satisfaction and relational trust. With our study, we give support for the proposition of customer satisfaction's as well as relational trust’s role as mediators of the relationship between corporate reputation and loyalty. With this research, we expand our knowledge on the well-known corporate reputation model, which has high relevance and important implications for marketing research and relationship management practice.

Drivers of Individual Credit Risk of Retail Customers—A Case Study on the Example of the Polish Cooperative Banking Sector

The main aim of the research was to determine the key factors determining the level of credit risk of individual clients (clients in the form of natural persons, excluding companies) on the example of Polish cooperative banks according to the following features: transaction characteristics, socio-demographic characteristics of the customer, the customer’s financial situation, the customer’s history of cooperation with the cooperative bank where they applied for a loan, and the customer’s history of cooperation with other financial institutions. For the research gathered data from 1000 credit applications submitted by individual customers when applying for a credit in five different cooperative banks were used for the analyses. To assess the credit risk of retail clients we use logit regression models, and additionally, score cards were calculated. The results of the research indicate that among the factors with high predictive power there were the features characterizing the client’s history of cooperation with the cooperative bank, where they applied for a loan. It may mean that when assessing credit risk related to financing individual customers, cooperative banks due to their local character, have an advantage over other financial institutions.

RATIONALE BEHIND AND DILEMMAS OVER CONSOLIDATION AND COOPERATION OF COOPERATIVE BANKS IN POLAND

The study analyses the processes of consolidation of cooperative banks in Poland in 2010-2020 and the cooperation of banks within operating cooperative banking associations. The essence of the processes of consolidation and cooperation of cooperative banks was determined and their premises, scale and effects to date were presented. The main focus was on the analysis of factors determining the need for the further transformation of the cooperative banking sector in Poland and the role that may be played by bank consolidation and various forms of cooperation of cooperative banks in this process. It has been shown that the consolidation of banks, consisting of taking over economically weak banks by larger cooperative banks, better performing on the market, is necessary, but it is not a solution leading to the development of the sector. Such a solution may be the tightening of cooperation between banks within associations, leading to the gradual integration of selected areas of banking activity while maintaining the autonomy of local banks in relations (at the contact) with customers.

Ex ante, ex post risk and bank capital ratios: an empirical investigation

PurposeThe purpose of this study is to investigate the impact of leverage, regulatory capital and tier-I capital ratios on the ex ante and ex post risk of Japanese banks.Design/methodology/approachTo test the hypotheses, the authors have implemented a panel of 507 commercial and cooperative banks of Japan over the period extending from 2001 to 2020, using a two-step system Generalized Method of Moments (GMM) framework.FindingsThe overall sample banks' results show that the impact of leverage, regulatory capital and tier-I capital ratios on ex ante and ex post risk is positive. The findings reveal that the effects of regulatory and tier-I capital ratios on ex post risk are negative (positive) for commercial (cooperative) banks, high-liquid, low-liquid and high-growth banks in Japan. In addition, the regulatory capital ratio is more beneficial for risk due to its power to absorb losses. The lagged coefficient indicates that banks require more time to adjust their ex post and ex ante risk during crisis period than during normal economic conditions.Practical implicationsThe heterogeneity in results has practical implications for regulators, policymakers and bank managers in formulating the capital requirement guidelines with respect to ex ante and ex post risk across different categories and characteristics of banks.Originality/valueTo the best of the authors' knowledge, this is the first study investigating the impact of leverage, regulatory capital and tier-I capital ratios on the ex ante and ex-post risk of Japanese commercial and cooperative banks over the period from 2001 to 2020. The insights into the impact of leverage, regulatory capital and tier-I capital ratios on the ex ante and ex post risk of well-capitalized, under-capitalized, high and low-liquid banks are new in the context of Japan.

Do job competencies influence the satisfaction of customers? An investigation in the cooperative banking sector

PurposeA cooperative bank customer in India has varied needs and is a unique segment of Indian banking. The purpose of the study is to provide the sector with an understanding of the needs of the cooperative bank customers in the context of improving core competencies required for the delivery of service.Design/methodology/approachThe study adopted multiple methods that included the Delphi method as well for competency identification. Appropriate factor analyses are conducted to confirm the construct validity and to determine the underlying structure of the variables chosen for the study. Stepwise multiple regression analysis is employed for data analysis.FindingsSurprisingly, emotional competency showed an insignificant relationship with customer satisfaction. The social and technical competencies are found significant. The findings suggest the incorporation of technological advancements in cooperative banks.Research limitations/implicationsThe generalization of the results is limited as the work was confined only to cooperative banks and also because of the limited sample size. The self-reported nature of competency measures also limits the accuracy of results.Practical implicationsThis work suggests that a bank has to concentrate on improving the technical competencies of the employees. The findings could also aid the bank managements in policy decisions in recruitment, selection, performance appraisal among others.Social implicationsCompetent employees could help meet the customers to satisfy their financial needs and thereby the social and economic development of the weaker section of the society could be achieved.Originality/valueConducting primary research and identification of technical competency as the major contributor to customer satisfaction are the major contributions.

Market Structure and Financial Stability: the Interaction between Profit-Oriented and Mutual Cooperative Banks in Italy

In this study, we analyze the relation between market structure and financial stability both theoretically and empirically by considering two types of agents: profit-oriented banks and mutual cooperative banks in the context of Italy. The main findings show that under the condition that mutual cooperative banks are not dominated by borrowers, there is an inverted U-shaped relation in which a less concentrated market structure increases stability for both types of banks but a more concentrated market structure reduces it.

Scoring Models and Credit Risk: The Case of Cooperative Banks in Poland

The aim of the research presented in the article was to analyse the legitimacy of the use of scoring models in banking activities, together with the assessment of the effectiveness of this tool in reducing the high value of the NPL ratio in Polish cooperative banks on the example of banks belonging to the BPS S.A. association in the period between 2004 and 2020. We used a variety of research methods for this purpose including a depth review of the literature, analysis of statistical data regarding the sector of Polish cooperative banks, analysis of financial data of cooperative banks, construction of an econometric panel model, and the designing a questionnaire (which was later sent to the management board of selected cooperative banks). Our research confirmed the significant impact of the use of scoring models in lending activities on the value of the NPL ratio in cooperative banks. The analysed cooperative banks, which used the scoring models proposed by BIK in their lending activity, showed significantly lower values of the NPL ratio in each analysed year than banks that used other scoring models. Our study also confirmed the different direction of the impact of the models offered by BIK and individual scoring models on the value of the NPL ratio. We have also shown that the scoring models proposed by BIK have a statistically significant negative impact on the level of the NPL ratio, and the banks’ own scoring models have a statistically significant positive impact on the level of the NPL ratio.

Economic Effects of the Digital Transformation on the Banking Market Using the Example of Savings Banks and Cooperative Banks in Germany

Due to the digital transformation, the banking sector in Germany is undergoing massive change. This structural change is massively influenced by technological progress, regulation and supervision, the low-interest phase and demographic change. The focus of this research is on the comparison of savings banks and cooperative banks in Germany, as there are many similarities between the two banking groups. Both belong to the so-called retail banks. The respective bank clients are very similar due to the regional principle, the structure in regional associations and in their clientele. The main purpose of this research is to investigate which of the two banking groups, savings banks or cooperative banks, is more operationally efficient under the same prevailing competitive pressure from the Digital Transformation. This paper summarises the analysis of both banking groups based on real ratios. The relevance of the findings on this scientific problem is that the comparison of savings banks and cooperative banks in Germany has not been addressed in the scientific literature so far. The aim of the research is to make a statement as to which banking group has performed better given the same external market factors. Furthermore, arguments and counter-arguments within the academic discussion on the topic of digitalization in the German banking market will be compiled. The results of the research can be useful for academics who deal with the digital transformation in the banking sector in Germany.