Title: FACTORS DETERMINING CREDIT UNION LOAN RATES IN LOCAL MARKETS
Abstract: This study uses a variant of the structure-performance model, often used in banking studies, to examine the credit union industries in Idaho and Montana. This should be of interest since credit unions have recently been the fastest growing type of depository institution. The used vehicle loan rate is the dependent variable. We found that credit union size, a proxy measure of economies of scale, and bank market share had negative and significant effects on loan rates. Credit union charge-offs, three-firm concentration ratios, higher salaries and a measure of credit union inefficiency led to significantly higher rates. FACTORS DETERMINING CREDIT UNION LOAN RATES IN LOCAL MARKETS Numerous past studies have examined bank structure. Most of these have used the structureperformance paradigm, which hypothesizes that banks in more concentrated markets may find collusion easier, leading to results such as higher profits, lower interest rates paid on deposits and higher interest rates changed on loans. For example, Gilbert (1984) wrote a survey of 44 bank structure studies published during the time period of 1964 to 1983. Tokle (2000) wrote a survey of eleven studies published during the time period of 1979 to 2001 that examined the effect of thrift competition on bank performance. Most of these studies used a structure-performance model. However, our literature search did not turn up any studies using the structure-performance model for credit unions. 1
Publication Year: 2002
Publication Date: 2002-01-01
Language: en
Type: article
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Cited By Count: 3
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