Governance, Regulation and Mutual Financial Intermediaries Performance

What are the factors that could enhance the performance of financial cooperatives?
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This paper presents results of a research on the impact of the governance, regulatory and supervisory environment on the performance of financial cooperatives (FC). The paper attempts to answer the following questions:

  • Are there any clearly identifiable models of FC governance, regulation and supervision?
  • Assuming such models are idntifiable, is it possible to develop a methodology to evaluate the level of system-wide performance of these models?

Thus, the paper:

  • Investigates the institutional structure and models of governance of FC;
  • Identifies, categorizes and compares the level of system-wide performance of a sample of FC systems;
  • Proposes and justifies the use of a Data Envelopment Analysis (DEA) based methodology;
  • Analyzes 16 cases of mature FC systems (mostly in industrialized countries).

Based on the analysis, the author concludes that:

  • There appear to be two dominant models of governance, regulation and supervision of FC:
    • The federated-network (FN) model,
    • The atomized-competitive (AC) model.
  • There is no equal performance between FC systems operating in both environments;
  • FC operating in the FN model appear to display superior performance than in the AC model;
  • The difference in performance can be related to governance and regulation and supervision of the system.

In conclusion, the author states that the last result is of crucial importance since it suggests that it might be possible to enhance the performance of a FC system by means that are considerably easier to control than cultural or political factors.

About this Publication

By Fischer, K.