Commercial banking inside a cooperative shell:

Abstract

Cooperative banks, in their original nature, are cooperative enterprises that are supposed to be governed by cooperative principles, values and practices. Banks, in the modern era, have opted and maintained the use of cooperative identity even when their formation, operation and governing principles are not in line with the International Cooperative Alliance (ICA) Statement on Cooperative Identity. Banking businesses owned by cooperative majority shareholders and which are not registered as cooperative enterprises have also confusingly been branded as cooperative banks for marketing and related reasons. The cooperative identity has in both cases become symbolic. The present study is an examination of cooperative identity in banking business. The authors critically analyse cooperative identity for select cooperative banks in common law Africa, Europe, America and Asia. Data was obtained by structured literature review (SLR), documentary review and analysed qualitatively using content analysis techniques. The study mainly found out that cooperative identity is based on cooperative values, principles and their application. For an entity to be recognised and referred to as a cooperative society, it must have been incorporated under cooperative societies legislation. The study found out existence of banks that are registered under companies’ laws and which are referred to as cooperative banks. Their identity, for branding is shelled by cooperatives but legitimacy lies with private companies’ attributes. They operate in accordance with companies’ practices, managed by bodies and structures different from those under cooperative societies structures. Even when cooperatives have majority shares, operations have targeted profit maximization than members’ benefits. The cooperative democratic governance is mostly offended with decisions left with the haves. The study concludes that cooperative banks are mostly symbolic as the business are by companies hiding in cooperatives shells. The study recommends various legislative and practical reforms to protect cooperative bank’s identity