Cooperatives are people-centered enterprises owned, controlled and run by and for their members to realize their common economic, social, and cultural needs and aspirations (ICA). The cooperative movement began in Europe in the 19th century, primarily in Britain and France, and now a days the cooperative movement is far for being a negligible phenomenon, at least 12% of humanity is a member of any of the 3 million cooperatives on earth. Cooperatives vary depending on the service offered and the way that the members are organized; and the major ones are producer or marketing cooperatives, consumer cooperatives, housing cooperatives and financial cooperatives, among others.
The history of co-operative banks has been traced back to the financial exclusion faced by many communities in 19th century. With the industrial revolution, the emerging financial services sector was primarily focused on wealthy individuals and large enterprises in urban areas. The rural population, particularly farmers, small businesses and the communities they supported, were excluded from financial services. Thus, co-operative banks were originally set up to correct this market failure and to overcome the associated problems of asymmetric information in favor of borrowers. Beginning in Germany, the co-operative banking concept gradually spread to the rest of the continent and to the Nordic countries.