Abstract

The specific functionality and success of credit cooperatives in the past is grounded on efficiency advantages generated through peer-monitoring, social sanctions, and institutional trust. Institutional economic theory and anecdotal historical evidence suggest that these core institutional mechanisms also had an effect on the employment structure of early credit cooperatives. By examining the employment structure of current credit cooperatives, we aim to provide insights to the question of how and to what extent original institutional mechanisms of credit cooperatives may still be functional. We use administrative establishment data from Germany and compare employment structures of banks by legal form. The results indicate that credit cooperatives in comparison with otherwise similar private and savings banks are characterized by more stable employment, an older workforce, more extensive training activities and a more homogeneous composition of employees.