Cooperative Banking for a sustainable Social Economy: Insights from Italy

Purpose: This paper aims to assess the dual objective of financial and social efficiency with a focus on Raiffeisen Cooperative Banks in Italy. Method: An input-oriented Data Envelopment Analysis was used to estimate efficiency scores for each Raiffeisen Cooperative Bank. In the second stage, a regression analysis is performed to relate efficiency scores to factors that investigate their influence on relative efficiency in terms of both financial performance and social impact. Findings: The study's findings revealed significant inefficiencies from a social perspective, while financial efficiency is generally strong, there is room for improvement in social efficiency. Implications: Cooperative banks are crucial in promoting social well-being and sustainable development by aligning operations with the Sustainable Development Goals (SDGs). A commitment to social impact should represent a strategic priority, not merely stated in principle but operationalized through measurable and accountable indicators. Raiffeisen Cooperative Banks should harness technological innovations to elevate the effectiveness of their commercial activities. At the same time, they need to use these advancements to maintain and strengthen client relationships across both digital and face-to-face channels, ensuring they remain responsive to the social dynamics and specific needs of the local communities they serve. Originality: The novelty of this research lies in its focus on a socio-economic sector in Italy that has not yet been studied in its dual dimensions. To the best of the authors' knowledge, this is the only study that examines the social impact - and consequently the mission coherence - of Raiffeisen Cooperative Banks, emphasizing the importance of the social mission in the sustainable development promoted by the cooperative banking system.