Building Relational Capital in Cooperative Banks of Italy: Role of Effective Communication, Relationship Age and Social Impacts

Abstract

The recent banking industry crisis in Italy highlighted irregular banking operations, overly risky investments, poor management and concealing important information from regulators giving a severe blow to the reputation of the whole industry. The banking crisis in Italy is two-fold now: capital crisis and reputation crisis. Lack of public support, trust and faith has put the banks in Italy in a tough spot. What banks need today is to regain the trust of the stakeholders, strengthen their reputation and build relational capital. This study shall explore how small cooperative banks in Italy can rebuild their relational capital through positive social impacts and effective communication among other initiatives.