Pricing and dividend policies in open credit cooperatives
AbstractThis paper develops an integrated model of pricing and dividend policies in open credit cooperatives (those that do business with members and non-members on a non-discriminatory basis). We show that both the distribution of member preferences and the amount of non-member business the cooperative does influence its optimal pricing and dividend policies. For a fixed distribution of member preferences, the larger the fraction of business done by members, the smaller the optimal dividend and the larger the optimal pricing subsidy (hence, increasing demand). On the other hand, for a fixed fraction of member business, the greater the skewness of member preferences toward loan (deposit) business with the credit cooperative, the larger the optimal dividend and the higher (lower) the optimal loan (deposit) interest rate. Aggregate empirical evidence from the German cooperative banking sector supports a version of the latter prediction, namely, that in an increasingly depositor-dominated open credit cooperative, average deposit rates tend to fall as dividend payouts rise.
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 InfoPaper provided by Federal Reserve Bank of St. Louis in its series Working Papers with number 2000-008.
Date of creation: 2000
Date of revision:
Publication status: Published in Journal of Theoretical and Institutional Economics, June 2002, 158(2), pp. 234-55
Other versions of this item:
- William R. Emmons & Frank A. Schmid, 2002. "Pricing and Dividend Policies in Open Credit Cooperatives," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 158(2), pages 234-, June.
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs
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.:
- Besley, T. & Coate, S. & Loury, G., 1990.
"The Economics Of Rotating Savings And Credit Associations,"
556, Massachusetts Institute of Technology (MIT), Department of Economics.
- Besley, Timothy & Coate, Stephen & Loury, Glenn, 1993. "The Economics of Rotating Savings and Credit Associations," American Economic Review, American Economic Association, vol. 83(4), pages 792-810, September.
- Timothy Besley & Stephen Coate & Glenn Loury, 1992. "The Economics of Rotating Savings and Credit Associations," Boston University - Institute for Economic Development 24, Boston University, Institute for Economic Development.
- Besley, T. & Coate, S. & Loury, G., 1992. "The economics of Rotating Savings and Credit Associations," Papers 157, Princeton, Woodrow Wilson School - Development Studies.
- Besley, T. & Coate, S. & Loury, G., 1990. "The Economics Of Rotating Savings And Credit Associations," Papers 149, Princeton, Woodrow Wilson School - Development Studies.
- David Canning & Clifford W. Jefferson & John E. Spencer, 1999.
"Optimal Credit Rationing in Not-For-Profit Financial Institutions,"
Harvard Institute of Economic Research Working Papers
1866, Harvard - Institute of Economic Research.
- David Canning & Clifford W. Jefferson & John E. Spencer, 2003. "Optimal Credit Rationing in Not-For-Profit Financial Institutions," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(1), pages 243-261, February.
- William R. Emmons & Willi Mueller, 1997. "Conflict of interest between borrowers and lenders in credit co- operatives: the case of German co-operative banks," Working Papers 1997-009, Federal Reserve Bank of St. Louis.
- Emmons, William R. & Schmid, Frank A., 1998.
"Credit unions and the common bond,"
CFS Working Paper Series
1999/01, Center for Financial Studies (CFS).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anna Xiao).
If references are entirely missing, you can add them using this form.