Based on a sample of banks from eleven European countries over the period 2001-2010, this paper examines the stability of cooperative banks in comparison with other business models, as well as the specific role played by cooperative banks in determining banking soundness. Our findings show that cooperative banks do exert positive and significant effects on average bank stability, although only in periods of financial distress. This contrasts with studies which blame the fragility of banking systems on the presence of non-profit maximizing entities. Largely mutualized banking systems demonstrate a better ability to withstand periods of crisis, preserving stronger customer confidence in bank stability.
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