Klinedinst, Mark (2011): Going forward financially: credit unions as an alternative to commercial banks.
Download (291kB) | Preview
The global financial meltdown brought to light a number of weaknesses in the U.S. financial system. Not all financial institution types will be taking large sums of taxpayer money to address their crippling decisions. Credit unions in the U.S. represent a type of financial cooperative that will probably not take any taxpayer money directly due to their structure and prudential oversight. Commercial banks, especially the megabanks, are likely to see even more bailouts in the future unless structural weaknesses are addressed in the clarifications as part of the enforcement of the Dodd-Frank Act. Using a unique panel data set on U.S. commercial banks, thrifts and credit unions from 1994 through 2010 (over 300,000 observations) performance metrics on a number of dimensions point to strengths and weaknesses of the various financial institutional forms. Credit unions also have had far fewer adjustable rate mortgages and mortgage backed securities as a percent of their portfolio. Robust estimators to correct for potential endogeneity are used to analyze the ROA differentials between different institutional forms and portfolios. When controlling for size, region and portfolios credit unions are estimated to have a better ROA. Institutions of under a billion dollars, 96 percent of the sample, show credit unions having higher efficiency in that they control 30 percent more assets per dollar spent on salaries than commercial banks.
|Item Type:||MPRA Paper|
|Original Title:||Going forward financially: credit unions as an alternative to commercial banks|
|Keywords:||credit unions, banks, cooperative, defaults, net charge-offs, return on assets|
|Subjects:||G - Financial Economics > G1 - General Financial Markets > G14 - Information and Market Efficiency ; Event Studies ; Insider Trading
P - Economic Systems > P0 - General
P - Economic Systems > P1 - Capitalist Systems > P13 - Cooperative Enterprises
L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L21 - Business Objectives of the Firm
G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages
|Depositing User:||Mark Klinedinst|
|Date Deposited:||08. Oct 2011 19:49|
|Last Modified:||13. Feb 2013 02:59|
Aoki, Masahiko, 2010, " “Individual” Social Capital, “Social” Networks, and Their Linkages to Economic Game," Annual World Bank Conference on Development Economics.
Baltagi, B. H., 2005. Econometric Analysis of Panel Data, Wiley, New York
Baltagi, B. H. and S. Khanti-Akom, 1990. “On the Efficient Estimation with Panel Data: An Empirical Comparison of Instrumental Variable Estimators, Journal of Applied Econometrics, 5, 401-406.
Berger, A.N. and Humphrey, D.B. (1992). Megamergers in banking and the use of cost efficiency as an antitrust defense. The Antitrust Bulletin, Fall: 541-600.
Bauer, Keldon, 2010, "What does credit union ROA really measure?, http://southwesternfinance.org/conf-2010/C5-1.pdf.
Blinder, Alan S. and Mark Zandi, 2010, "How the Great Recession Was Brought to an End," Moody's, http://www.economy.com/mark-zandi/documents/End-of-Great- Recession.pdf.
Congressional Oversight Panel, “The AIG Rescue, Its Impact on Markets, and the Government’s Exit Strategy,” http://cop.senate.gov/documents/cop-061010- report.pdf Accessed June 30, 2010.
Congressional Oversight Panel, “The Final Report of the Congressional Oversight Panel,” http://cybercemetery.unt.edu/archive/cop/20110401232213/http://cop.senate.gov/ documents/cop-031611-report.pdf, March 16, 2011.
Goddard J., McKillop D. and Wilson J. " Consolidation in the US Credit Union Sector: Determinants of Failure and Acquisition", FDIC, www.fdic.gov/bank/analytical/cfr/Goddard_McKillop_Wilson.pdf, 2008.
Greer, Douglas F. and Stephen A. Rhoades, 1977. “Test of the Reserve Labour Hypothesis” The Economic Journal, Vol. 87, No. 346 (Jun., 1977), pp. 290-299
Hampel, Bill, Mike Schenk, and Steve Rick, 2008. "The U.S. Mortgage Crisis Causes, Effects and Outlook Including Suggested Credit Union Responses" Madison, Wisconsin: Credit Union National Association.
Klinedinst, Mark, 2007. “Cooperative Comebacks: Resilience in the Face of the Hurricane Katrina Catastrophe,” Filene Research Monographs.
Lieberman, Marvin B. and Shigeru Asaba, 1997. “Inventory Reduction and Productivity Growth: A Comparison of Japanese and US Automotive Sectors,”Managerial and Decision Economics, Vol. 18, pp. 73-85.
Park, Kang H. and William L. Weber, 2006. “Profitability of Korean banks: Test of market structure versus efficient structure,” Journal of Economics and Business, Vol. 58, pp. 222-239.
Sollenberger, Harold M., 2008, Financially “High-Performing” Credit Unions: Evaluating Performance within a Strategic Financial Vision,” Filene Research Monographs.
Walter, Stefan, Secretary General, "Basel III and Financial Stability," Basel Committee on Banking Supervision, at the 5th Biennial Conference on Risk Management and Supervision, Financial Stability Institute, Bank for International Settlements, Basel, 3-4 November 2010.
White, H. 1980. “A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity,” Econometrica 48, 817-838.
Woolridge, Jeffrey M. 2006. Econometric Analysis of Cross Section and Panel Data, MIT Press, Cambridge Massachusetts.
Available Versions of this Item
- Going forward financially: credit unions as an alternative to commercial banks. (deposited 08. Oct 2011 19:49) [Currently Displayed]