| Summary: | The 2008 global crisis, and the European sovereign debt crisis that follow it, originated, among other consequences, a general mistrust in financial institutions. This situation encourages the debate on the role of co-operative banks within a fairer society and their social responsibility as a key in the economic recovery, namely in the south European countries. The co-operative banking sector remains poorly understood and its specific governance challenges remain largely unexplored. The research included in this thesis aims to improve knowledge of the conduct and performance of the co-operative banks, and its findings should support the decision making process by members and management, mainly in terms of governance model. Thus, the main objective of this research is to analyse, both theoretically and empirically, the governance and financial robustness of co-operative banks, taking as a reference the Portuguese agricultural credit co-operatives (CCAM) and their integrated system (SICAM). Specifically, the thesis is structured in order to answer the following questions: (1) What are the economic bases of co-operative banks?; (2) How does a particular regulatory framework affect co-operative banking activity?; (3) What is the impact of the different governance mechanisms of co-operative banks on control management?; and (4) What are the explanatory factors of Portuguese co-operative bank failures? Besides the Introduction (Chapter 1) and the Conclusions (Chapter 6), the answer to these four questions is formulated in the chapters 2 to 5. Chapter 2 includes a survey of the economic nature of the co-operatives as a specific economic organisation, highlighting the strengths and the weaknesses of the governance model of co-operative banking. Chapter 3 presents a literature review of the regulatory framework and some historic data on the Portuguese co-operative credit system. Chapter 4 is concerned with the governance of co-operative banks, paying special attention to the control mechanisms operating within SICAM and assessing its effect on CCAM performance by two multinomial logit models. Chapter 5 is concerned with the survival of CCAM associated within SICAM, analysing the determinants of CCAM failures, by the estimation of a logistic regression analysis and a multiple discriminant analysis. In empirical terms, the period under analysis is mainly 1995–2009. As recognized in the literature on the topic, the co-operative governance model presents deficiencies in controlling agency conflicts, mainly resulting from its co-operative nature, which can jeopardize its survival. Operating in network, the CCAM are able to improve the effectiveness of CCAM governance mechanisms and, consequently, their performance. The results highlight the importance of the supervision role of Central CCAM in the performance of its associates. Moreover, the analysis of CCAM failure emphasizes the importance of diversifying CCAM income sources and of improving cost efficiency. This result support CCAM lobbying for the removal of product restrictions, in order to achieve better conditions to compete with IOF banks, at a time when these banks are reorienting their activities towards traditional banking activity, i.e., domestic retail banking, the usual business core of CCAM.
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