THE IMPACT OF BASEL 2 ON CO-OPERATIVE BANKING

This book section provides an analysis of the possible effects of the implementation of the New Capital Accord and of the directives 2006/48/EC and 2006/49/EC on cooperative banking. A comparison between the viewpoints about the proposal for New Capital Accord and EU directive expressed by bank associations organized according to different models, on the one hand, and the evidence given in some theoretical and empirical contributions as well as in the quantitative impact studies made on behalf of Basel Committee and EU authorities, on the other, have allowed to infer the expected effects on cooperative banking in relation to the legal/institutional structure and the size typical of the sector. The Basel 2 Accord seems to penalize the groups featuring a decentralized network structure when compared with more centralized systems. The medium-small size of cooperative banks – also belonging to groups operating at an international level –, in particular, of decentralized local banks, allows to extend to cooperative banking the considerations made in literature about the consequences of the regulatory reform on the traditional equilibrium between larger and smaller banks, taking into account that the latter will likely adopt the standardized approach to credit risks. The EC directive concerning capital requirements seems to lessen the impact of Basel 2 on the cooperative banking system, if some specific features of the sector are duly taken into account, but does not solve all the problems connected with fair conditions of competition between institutions characterized by different legal/institutional structures.