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Who Could We Blame? The Impact of Strategic Orientations on the Failure of Financial Institutions

Author

Listed:
  • Xuan Vinh Vo

    (University of Economics Ho Chi Minh City, Ho Chi Minh City, Vietnam and CFVG Ho Chi Minh City, Ho Chi Minh City, Vietnam)

  • Tuan Quoc Le

    (National Yang Ming Chiao Tung University, Taiwan3Centre for Applied Economics and Business Research, Hanoi, Vietnam)

  • Thi Lam Anh Nguyen

    (Banking Academy of Vietnam, Hanoi, Vietnam3Centre for Applied Economics and Business Research, Hanoi, Vietnam)

  • Hiep Ngoc Luu

    (University of St Andrews, St Andrews, UK3Centre for Applied Economics and Business Research, Hanoi, Vietnam)

Abstract

We evaluate the impact of strategic orientation on the failure probability of financial institutions. Using the US credit union industry as the empirical setting, we find that credit unions which exhibit preferential treatment to borrowers are more likely to fail, whereas those who set operational strategies towards balancing the benefits between savers and borrowers experience a lower failure probability. The impacts appear to be more pronounced in small credit unions and in credit unions which have a lower operating experience. We also find that borrower-oriented credit unions generate lower interest margins while neutral behavior credit unions generate higher margins.

Suggested Citation

  • Xuan Vinh Vo & Tuan Quoc Le & Thi Lam Anh Nguyen & Hiep Ngoc Luu, 2021. "Who Could We Blame? The Impact of Strategic Orientations on the Failure of Financial Institutions," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 24(02), pages 1-27, June.
    • Handle: RePEc:wsi:rpbfmp:v:24:y:2021:i:02:n:s0219091521500119
    DOI: 10.1142/S0219091521500119
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