Performance and Assets and Liabilities Management in the U.S. Credit Union

Abstract

Our main research objective is to study the influence of different decisions inherent to allocating assets, and to the weights given to some types of loans on the profitability of credit unions. Only few studies having been carried out on these financial institutions and on their asset portfolio structural change. Another objective is to analyse the influence of increasing deposits, as part of liabilities, on their financial performance. In order to reach our research objectives, we carried out statistical analyses and panel regressions by using biannual data from a large sample of credit unions in the United States. In fact, we analyzed the influence of the choices of allocating some assets and liabilities, represented by ratios, on the profit of credit unions in the United States for 20 years, represented by the return on assets. The results of our analysis enable us to conclude that attracting more deposits would ensure better profitability for these credit unions. As regards to loan types, the increase of the first mortgage loans weight is a profitable strategy. Our research add value to the field of financial institutions management, since most studies concern banks profitability and cannot be generalized to credit unions. Keywords: Credit unions, Credit unions performance, Credit unions asset portfolio structure, Credit union deposits, Assets and liabilities management in banking industry, First mortgage loan.