Credit Union to Mutual Conversion: Do Interest Rates Diverge?

Heinrich, Jeff; Kashian, Russ

doi:10.1111/j.1465-7287.2007.00055.x

Cited by 17 publications

(8 citation statements)

References 11 publications

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“…The potential sophistication of financial services on offer to members depends on country specific regulation and legislation. For example, in the United States, Canada and Australia, credit union regulation is similar to that of banks and hence some credit unions in these countries have grown into large bank-like organisations or have converted to banks (Heinrich and Kashian 2008;Davis 2007). In other countries such as Great Britain, Poland, Romania, Macedonia and NI, national legislation restricts the products that credit unions can offer, such as rules on loan size amounts and durations (McKillop et al 2010) and credit unions have remained community, member-governed, NP, financial organisations.…”

Section: Institutional Backgroundmentioning

confidence: 99%

Financial Management Effectiveness and Board Gender Diversity in Member-Governed, Community Financial Institutions

Ward

Forker

2015

J Bus Ethics

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Although non-profit organisations typically have high representation of females on their boards, relatively little is known about the effects of gender diversity in these organisations particularly in relation to financial management. In this archival study, resource dependency theory and agency analysis are combined to provide theoretical insight and empirical analysis of gender diversity on effective financial management in member-governed, community financial institutions. The investigation is possible due to the unique characteristics of the organisational form and region being examined-credit unions in Northern Ireland. The sector has not been subject to external regulation on board gender, yet a wide array of gender mix on boards ranging from 100 % male to 100 % female are in existence. In addition, effective financial management is crucial to their survival and their ability to meet member objectives. Boards with higher female representation exhibit superior financial management first, in respect of loan book quality in the period of austerity following the financial crisis and second when measured against return on assets.

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Section: Institutional Backgroundmentioning

confidence: 99%

Financial Management Effectiveness and Board Gender Diversity in Member-Governed, Community Financial Institutions

Ward

Forker

2015

J Bus Ethics

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“…Second, in this analysis we are only investigating the savings to credit union members from auto loans, which make up roughly one‐third of credit union loan portfolios. However, evidence suggests that credit union members also benefit from lower rates on mortgages and unsecured loans, as well as higher rates on deposits (e.g., DeYoung et al, 2019; Feinberg & Ataur Rahman, 2006; Feinberg & Meade, 2017; Heinrich & Kashian, 2008; Tokle & Tokle, 2000). We also find a pattern of lower credit union loan rates in the SCF data across a variety of loan products, as well as higher deposit rates.…”

Section: Testing Alternative Explanationsmentioning

confidence: 99%

“…32 For example: Andreoni (1989); Ashraf and Bandiera (2017); Besley and Ghatak (2017); Moore (1996, 1998); Hedblom et al (2019); Van Rijn and Li (2019). 33 For example: DeYoung et al (2019); Feinberg and Meade (2017); Heinrich and Kashian (2008); Tokle and Tokle (2000). 34 For more background information on credit union fields of membership, see van Rijn (2018).…”

Section: Prime Borrowers and Interest-rate Shoppersmentioning

confidence: 99%

Financial institution objectives and auto loan pricing: Evidence from the survey of consumer finances

Rijn

Zeng

Hellman

2021

Journal of Consumer Affairs

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Prior studies of interest rate differentials between credit unions and commercial banks suffer from selection bias since they rely on data at the level of the financial institution or branch which cannot account for demand‐side or loan‐level characteristics. We improve on these studies by using household‐ and loan‐level data from the Federal Reserve's Survey of Consumer Finances from 2001 to 2019. We find that, on average, households that receive auto loans from credit unions pay 0.70 percentage points less on interest rates for new vehicles—and 1.40 percentage points less on used vehicles—relative to observably similar households that receive auto loans from banks. The aggregated savings to credit union members is larger than the estimated value of the credit union corporate income tax exemption. Nonetheless, the benefit from lower auto loan rates is likely an underestimate of the true value to consumers of credit unions' presence in the market.

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“…Credit unions are less sensitive, in terms of loan default risk, than banks to macroeconomic shocks (Smith and Woodbury, 2010). Credit unions, by virtue of the diffuse nature of financial benefits and its representative governance structure, are exposed to reduced risk tendencies as compared to banks, thereby enabling credit unions to charge lower consumer loan rates (Becker, 2004;Heinrich and Kashian, 2008;Smith and Woodbury, 2010;Goddard et al, 2015).…”

Section: Ijbm 345mentioning

confidence: 99%

Community bank product design within an asymmetric competitive market

McKee

Kagan

2016

International Journal of Bank Marketing

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Purpose – The purpose of this paper is to assess product and service arrays of community banks within competitive markets that are impacted by varying sized financial institutions. A cost efficiency model is used to understand the relationship of product offerings and business cycle response upon bank performance. Design/methodology/approach – A cost efficiency model is used to understand the relationship of product offerings and business cycle response upon bank performance. Markets comprised of alternate size and type of financial institutions are compared. Findings – Greater values of X_EFF i when institutions compete are observed in this analysis. Cost efficiency is lowest when community banks are the only institution in the market, and second lowest when credit unions are the only competing institutions. Call report data are analyzed from 1994 to 2013. The number of big banks increases community bank efficiency and efficiency of large banks. Also, the number of community banks does affect big bank cost efficiency. The magnitude of the effect pertaining to the number of community banks upon big bank efficiency is much smaller than that of the number of big banks on community bank efficiency. Originality/value – This study considers cost efficiency and profitability as measures of institution on the performance of a competing institutional type. The modeling approach uses cost efficiency as a method of observing the performance of financial institutions and an explanation of how firms persist, grow, and respond to changes in technology or regulation. The effects of the presence of each type of financial institution on the performance of another type are compared. Situations in which any number of one or more institutional types is present in a market are considered for analysis purposes.

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Credit Union to Mutual Conversion: Do Interest Rates Diverge?

Cited by 17 publications

References 11 publications

Financial Management Effectiveness and Board Gender Diversity in Member-Governed, Community Financial Institutions

Financial Management Effectiveness and Board Gender Diversity in Member-Governed, Community Financial Institutions

Financial institution objectives and auto loan pricing: Evidence from the survey of consumer finances

Community bank product design within an asymmetric competitive market

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