Banks’ Business Models in Europe: Are Cooperative Banks Different?

Abstract

The previous decades have seen a frenetic race to high returns on equity coupled with excessive risk-taking, encouraged by a lax monetary policy and accommodating banking regulations. This has led to major changes in the way banks conduct business. The failures of several large banks with unsustainable business models has spurred contagion and contributed to the global financial and Eurozone economic crises. However, not all types of banks are facing the same challenges and/or responding in the same way to crises. This chapter on business models attempts to address the diversity of banks in Europe and to better understand the response function of each category in a crisis situation in terms of performance and risk.