Introduction

This chapter defines cooperative financial institutions, gives an overview on the current size of the sector, and provides an outline of the book, key arguments, data and methods used, and main empirical findings. The chapter lays the rational and motive behind the interest in the economics of cooperative financial institutions. It discusses the increasing role of the financial sector in almost all economies – developed or underdeveloped – and the parallel trend of increasing income and wealth concentration. It then argues that the debate over financialization and distribution should focus more on the control over financial resources and the structure of the financial sector. It also reviews current literature showing the comparative advantage of financial cooperatives over for-profit commercial banks and microfinance institutions. It argues that financial cooperatives can support inclusive development in the current stage of financial capitalism, especially for underdeveloped economies, as opposed to mainstream microfinance or financial inclusion movements, because they can provide adequate financial services and representation for underserved populations. Finally, it discusses the current and persisting limitations, problems, and challenges facing financial cooperatives, to avoid falling into an idealisation trap of the cooperative banking concept.