Yamin Ahmad () (Department of Economics, University of Wisconsin - Whitewater) Russell Kashian () (Department of Economics, University of Wisconsin - Whitewater)
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This paper investigates the characteristics possessed by credit unions who have converted to mutual savings institutions, which might lead them to demutualize and become publicly traded banks. We adopt a duration model framework to examine these characteristics. Our key findings are as follows. First, we find evidence of positive duration dependence in the data we examine. Second, we find that the hazard of an IPO issue increases in two waves. The first occurs between three and a half to four years reflecting the increased transition intensity for those who wish to demutualize early. However, the majority of the institutions in our sample do so by approximately eight years after conversion, and this is where the second spike in the hazard occurs. Finally, upon estimating the model with Cox’s (1975) semi-parametric partial likelihood approach, we find the probability that a converted institution will issue an IPO is influenced to a large extent by various measures that capture asset quality, in particular through measures that are equity driven. However, contrary to what one might expect, we find that total assets do not appear to influence the hazard rate.
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Paper provided by UW-Whitewater, Department of Economics in its series Working Papers with number
08-01.
Length: 37 pages Date of creation: Apr 2008 Date of revision: Publication status: forthcoming, Journal of Economics and Finance Handle: RePEc:uww:wpaper:08-01
References listed on IDEAS 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.:
Aruna Srinivasan & B. Frank King, 1998.
"Credit union issues,"
Economic Review,
Federal Reserve Bank of Atlanta, issue Q 3, pages 32-41.
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