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Profitability of Credit Unions, Commercial Banks and Savings Banks: A Comparative Analysis

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  • Surendra K. Kaushik
  • Raymond H. Lopez

Abstract

The liberalization of product and price competition among depository intermediaries in the United States has tended to make them more similar since enactment of the Depository Institutions Deregulation and Monetary Control Act in 1980 (DIDMCA). Credit unions have developed into highly efficient organizations for meeting the basic financial needs of their members. Credit unions, although only one-twelfth their size, are at least as profitable as commercial banks and savings banks. The savings banking industry has maintained its competitive profitability as the industry has shrunk in the late 1980's and early 1990's. Credit union loan portfolios have grown more rapidly than either commercial banks' or savings institutions‘. Their net interest margins have been above the banks' in recent years. Growth in the equity capital accounts of credit unions has been consistently more than double that of commercial banks since 1985, giving them a substantial advantage with regard to overall “safety and soundness†compared with commercial and savings banks.

Suggested Citation

  • Surendra K. Kaushik & Raymond H. Lopez, 1996. "Profitability of Credit Unions, Commercial Banks and Savings Banks: A Comparative Analysis," The American Economist, Sage Publications, vol. 40(1), pages 66-78, March.
    • Handle: RePEc:sae:amerec:v:40:y:1996:i:1:p:66-78
    DOI: 10.1177/056943459604000109
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    References listed on IDEAS

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    1. John V. Duca & Mary M. McLaughlin, 1990. "Developments affecting the profitability of commercial banks," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Jul, pages 477-499.
    2. Kim, H Youn, 1986. "Economies of Scale and Economies of Scope in Multiproduct Financial Institutions: Further Evidence from Credit Unions: A Note," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 18(2), pages 220-226, May.
    3. Allan D. Brunner & Diana Hancock & Mary M. McLaughlin, 1992. "Recent developments affecting the profitability and practices of commercial banks," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Jul, pages 459-483.
    4. Surendra K. Kaushik & Raymond H. Lopez, 1994. "The Structure and Growth of the Credit Union Industry in the United states: Meeting Challenges of the Market," American Journal of Economics and Sociology, Wiley Blackwell, vol. 53(2), pages 219-243, April.
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    Cited by:

    1. Mine Aysen Doyran, 2012. "Evidence On Us Savings And Loan Profitability In Times Of Crisis," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 6(1), pages 35-50.

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