Are Credit Unions Just Small Banks? Determinants of Loan Rates in Local Consumer Lending Markets
AbstractOnly recently have studies of banking markets paid attention to the potential competitive discipline provided by credit unions on consumer loan rates. However, an unresolved issue is the extent to which credit unions are substitutable for banks. We analyze a combined sample of 100 banks and 187 credit union in 68 U.S. markets observed quarterly over the 1992-1998 period, to explain loan rates for two types of consumer loans. Our results suggest that, even after controlling for market shares and deposit sizes of institutions, credit unions charge their members significantly lower interest rates on loans than do banks. Furthermore, an examination of the pattern of responses to lagged interest rates yields an indication of greater inertia in rate-setting by credit unions than by banks.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Eastern Economic Association in its journal Eastern Economic Journal.
Volume (Year): 32 (2006)
Issue (Month): 4 (Fall)
Contact details of provider:
Postal: c/o Dr. Alexandre Olbrecht, The Anisfield School of Business 205, Ramapo College, 505 Ramapo Valley Road, Ramapo, New Jersey 07430, USA
Phone: (201) 684-7346
Web page: http://www.ramapo.edu/eea/journal.html
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dean F. Amel & Martha Starr-McCluer, 2001. "Market definition in banking: recent evidence," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 2001-16, Board of Governors of the Federal Reserve System (U.S.).
- Oliver Hart & John Moore, 1998.
"Cooperatives vs. Outside Ownership,"
Harvard Institute of Economic Research Working Papers, Harvard - Institute of Economic Research
1816, Harvard - Institute of Economic Research.
- Oliver Hart & John Moore, 2004. "Cooperatives vs. Outside Ownership," ESE Discussion Papers, Edinburgh School of Economics, University of Edinburgh 114, Edinburgh School of Economics, University of Edinburgh.
- Oliver Hart & John Moore, 1998. "Cooperatives vs. Outside Ownership," NBER Working Papers 6421, National Bureau of Economic Research, Inc.
- Oliver Hart & John Moore, 1998. "Cooperatives vs. Outside Ownership," STICERD - Theoretical Economics Paper Series, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE 346, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Hannan, Timothy H. & Prager, Robin A., 2004.
"The competitive implications of multimarket bank branching,"
Journal of Banking & Finance, Elsevier,
Elsevier, vol. 28(8), pages 1889-1914, August.
- Timothy H. Hannan & Robin A. Prager, 2001. "The competitive implications of multimarket bank branching," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 2001-43, Board of Governors of the Federal Reserve System (U.S.).
- Navratil, Frank J, 1981. "An Aggregate Model of the Credit Union Industry," Journal of Finance, American Finance Association, American Finance Association, vol. 36(2), pages 539-49, May.
- Katerina Simons & Joanna Stavins, 1998. "Has antitrust policy in banking become obsolete?," New England Economic Review, Federal Reserve Bank of Boston, Federal Reserve Bank of Boston, issue Mar, pages 13-26.
- Feinberg, Robert M, 1985. ""Sales-at-Risk": A Test of the Mutual Forebearance Theory of Conglomerate Behavior," The Journal of Business, University of Chicago Press, University of Chicago Press, vol. 58(2), pages 225-41, April.
- B. Douglas Bernheim & Michael D. Whinston, 1990. "Multimarket Contact and Collusive Behavior," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 1-26, Spring.
- William R. Emmons & Frank A. Schmid, 2000. "Bank competition and concentration: do credit unions matter?," Review, Federal Reserve Bank of St. Louis, Federal Reserve Bank of St. Louis, issue May, pages 29-42.
- Feinberg, Robert M. & Rahman, A. F. M. Ataur, 2001. "A causality test of the relationship between bank and credit union lending rates in local markets," Economics Letters, Elsevier, Elsevier, vol. 71(2), pages 271-275, May.
- Gilbert, R Alton, 1984. "Bank Market Structure and Competition: A Survey," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 16(4), pages 617-44, November.
- Yamin Ahmad & Russell Kashian, 2010.
"Modeling the time to an initial public offering: When does the fruit ripen?,"
Journal of Economics and Finance, Springer,
Springer, vol. 34(4), pages 391-414, October.
- Yamin Ahmad & Russell Kashian, 2008. "Modeling the Time to an Initial Public Offering: When does the Fruit Ripen?," Working Papers, UW-Whitewater, Department of Economics 08-01, UW-Whitewater, Department of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Victor Matheson, College of the Holy Cross).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.