Are credit unions too small?
Since 1985, the share of U.S. depository institution assets held by credit unions has nearly doubled, and the average (inflation-adjusted) size of credit unions has increased over 600 percent. We use a non-parametric local-linear estimator to estimate a cost relationship for credit unions and derive estimates of ray-scale and expansion-path scale economies. We employ a dimension-reduction technique to reduce estimation error, and bootstrap methods for inference. We find substantial evidence of increasing returns to scale across the range of sizes observed among credit unions, suggesting that an easing of regulations on credit union membership or activities would lead to further increases in the size of credit unions.
|Date of creation:||2008|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.stlouisfed.org/
More information through EDIRC
|Order Information:|| Email: |
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.:
- Enno Mammen, .
"Comparing nonparametric versus parametric regression fits,"
Statistic und Oekonometrie
9205, Humboldt Universitaet Berlin.
- Hardle, W. & Mammen, E., 1990. "Comparing nonparametric versus parametric regression fits," CORE Discussion Papers 1990065, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- John R. Walter, 2006. "Not your father's credit union," Economic Quarterly, Federal Reserve Bank of Richmond, issue Fall, pages 353-377.
- Bauer, Keldon, 2008. "Detecting abnormal credit union performance," Journal of Banking & Finance, Elsevier, vol. 32(4), pages 573-586, April.
- Wheelock, David C. & Wilson, Paul W., 2001.
"New evidence on returns to scale and product mix among U.S. commercial banks,"
Journal of Monetary Economics,
Elsevier, vol. 47(3), pages 653-674, June.
- David C. Wheelock & Paul W. Wilson, 1997. "New evidence on returns to scale and product mix among U.S. commercial banks," Working Papers 1997-003, Federal Reserve Bank of St. Louis.
- Fried, Harold O. & Knox Lovell, C. A. & Eeckaut, Philippe Vanden, 1993. "Evaluating the performance of US credit unions," Journal of Banking & Finance, Elsevier, vol. 17(2-3), pages 251-265, April.
- Guilkey, David K & Lovell, C A Knox & Sickles, Robin C, 1983. "A Comparison of the Performance of Three Flexible Functional Forms," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 24(3), pages 591-616, October.
- Wheelock, David C & Wilson, Paul W, 1999.
"Technical Progress, Inefficiency, and Productivity Change in U.S. Banking, 1984-1993,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 31(2), pages 212-34, May.
- David C. Wheelock & Paul W. Wilson, 1996. "Technical progress, inefficiency and productivity change in U.S. banking, 1984-1993," Working Papers 1994-021, Federal Reserve Bank of St. Louis.
- Mitchell A. Petersen & Raghuram G. Rajan, 2000.
"Does Distance Still Matter? The Information Revolution in Small Business Lending,"
NBER Working Papers
7685, National Bureau of Economic Research, Inc.
- Mitchell A. Petersen & Raghuram G. Rajan, 2002. "Does Distance Still Matter? The Information Revolution in Small Business Lending," Journal of Finance, American Finance Association, vol. 57(6), pages 2533-2570, December.
- Mitchell, Karlyn & Onvural, Nur M, 1996. "Economies of Scale and Scope at Large Commercial Banks: Evidence from the Fourier Flexible Functional Form," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(2), pages 178-99, May.
- Smith, Donald J, 1984. " A Theoretic Framework for the Analysis of Credit Union Decision Making," Journal of Finance, American Finance Association, vol. 39(4), pages 1155-68, September.
- Racine, Jeff & Li, Qi, 2004. "Nonparametric estimation of regression functions with both categorical and continuous data," Journal of Econometrics, Elsevier, vol. 119(1), pages 99-130, March.
- McAllister, Patrick H. & McManus, Douglas, 1993. "Resolving the scale efficiency puzzle in banking," Journal of Banking & Finance, Elsevier, vol. 17(2-3), pages 389-405, April.
- Leggett, Keith J. & Strand, Robert W., 2002. "Membership growth, multiple membership groups and agency control at credit unions," Review of Financial Economics, Elsevier, vol. 11(1), pages 37-46.
- R. Alton Gilbert & Adam M. Zaretsky, 2003. "Banking antitrust: are the assumptions still valid?," Review, Federal Reserve Bank of St. Louis, issue Nov, pages 29-52.
- Gallant, A. Ronald, 1982. "Unbiased determination of production technologies," Journal of Econometrics, Elsevier, vol. 20(2), pages 285-323, November.
- Scott Frame, W. & Karels, Gordon V. & McClatchey, Christine A., 2003. "Do credit unions use their tax advantage to benefit members? Evidence from a cost function," Review of Financial Economics, Elsevier, vol. 12(1), pages 35-47.
- Goddard, John A. & McKillop, Donal G. & Wilson, John O. S., 2002. "The growth of US credit unions," Journal of Banking & Finance, Elsevier, vol. 26(12), pages 2327-2356.
When requesting a correction, please mention this item's handle: RePEc:fip:fedlwp:2008-033. See general information about how to correct material in RePEc.
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.