The Role of Cooperative Banks and Smaller Institutions for the Financing of SMEs and Small Midcaps in Europe

This paper provides background information on the market segment of smaller bank institutions and cooperative banks. On European level, there is more information available on cooperative banks than on “smaller institutions” in general. Therefore, the paper largely focuses on the cooperative banking segment. The chapters are divided as follows: 

• SME financing in Europe and the general role of banks for SMEs’ access to finance; 
• Sub-segment of smaller institutions;
• Specific characteristics of cooperative banks;
• The cooperative banking sector in Europe;
• The importance of cooperative banks in SME financing;
• The EREM CBSI window and findings.

It should be noted that this text is not to be seen as a typical “market analysis”, as there is no “market” for cooperative banking (and/or small institutions), formed by a cooperative banking supply side and a demand for cooperative banking products. Rather, the market consists of banking products in general, and cooperative banking forms part of it. Hence, this research will not compare supply and demand, but rather look at the reasons to pay particular attention to cooperative banking and to treat it to a certain extent differently than other market segments.