Title: The inadequacy of the dimension of assets to classify financial institutions: application to cooperative banks

Authors: Ricardo Palomo-Zurdo; Gabriela Fernández-Barberís; Milagros Gutiérrez-Fernández

Addresses: Department of Finance and Accounting, School of Business and Economics, University CEU San Pablo, 23, Julián Romea St. 28003, Madrid, Spain ' Department of Applied Mathematics and Statistics, School of Business and Economics, University San Pablo CEU, 23, Julián Romea St. 28003, Madrid, Spain ' Department of Finance and Accounting, School of Business and Economics, University of Extremadura, Av. De la Universidad s/n. 10071, Cáceres, Spain

Abstract: In this research, a new approach for the classification of cooperative banks is presented by using a multi-criteria analysis in order to combine financial and economic variables with social ones. Both type of variables are indispensable and can be joined due to the unique characteristics of these financial entities with social performance. The sample is formed with the cooperative banks registered in Spain. The results show a new ranking that allows us to study the existing relation between different variables of an entity and the fulfilment of its original social purpose, as a special type of banking activity. Furthermore, the obtained ranking supports the hypothesis that the concentration in this sector, due to the financial crisis from 2009 until now, has not followed economic or social criteria. Hence, there is a lack of homogeneity in its business model as we can see in the present situation. And this leads to the failure of some of these convergence processes that, in some cases, lead to an inevitable bankruptcy.

Keywords: cooperative banks; classification; financial institutions; multicriteria analysis; economic efficiency; social criteria; institutional protection system; IPS; financial performance; operational research; Spain; financial assets; social performance; bankruptcy; banking industry.

DOI: 10.1504/IJOR.2015.072228

International Journal of Operational Research, 2015 Vol.24 No.3, pp.279 - 304

Received: 22 Feb 2013
Accepted: 22 Sep 2013
Published online: 06 Oct 2015 *

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