Journal of Co-operative Studies, 34(2), 141-154

Abstract

Few other areas of German banking have seen the structural transformations as significant as within the co-operative bank sector in recent years. Besides a dynamic and organic growth, a number of mergers increasingly contributed to the fact that the average German credit co-operative increased its total assets by 51.6 per cent to DM 417.4 million from 1993 to the end of 1999 alone. At least, the business success achieved in this growth process seems not to put into question the strategy in general and thus a great number of additional mergers has already been announced. Particularly with regard to the specific structures of co-operative banks, however, it can be doubted whether the organisational frame and the mutual spirit by statute of today's co-operative banks are still appropriate for the current bank sizes and thus, whether the growth strategy does not also carry negative concomitants. From this background, the paper briefly outlines the market success of German co-operative banks in recent years and contrasts the findings with the latest discussion about member orientation as the statutory main goal. Within the framework of a simple empirical analysis, the paper also investigates whether an increasing bank size also has negative consequences for the members of German credit co-operatives.