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Credit Unions, Consolidation and Business Formation: Evidence from Canadian provinces

  • Morgan, Horatio M.
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    This study empirically evaluates the impact of consolidation activity in the credit union system on the rate of business formation. Drawing on Canadian provincial-level data over the period 1992-2009, it provides evidence which suggests that consolidation activity is unlikely to hurt business formation in the absence of intense competition in the credit market. Specifically, a unit increase in credit union assets per working-age (15-64) individual has a negative, but negligible effect on the rate of business formation. However, the intensification of competition in the credit union system may increase the magnitude of this negative effect. These findings may inform the formulation of small business and entrepreneurship policies. In particular, they suggest that competition policies on the banking sector warrant greater attention as consolidation activity unfolds in the credit union system.

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    File URL: http://mpra.ub.uni-muenchen.de/52327/7/MPRA_paper_52327.pdf
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    File URL: http://mpra.ub.uni-muenchen.de/52484/1/MPRA_paper_52484.pdf
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    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 52327.

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    Date of creation: 18 Oct 2013
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    Handle: RePEc:pra:mprapa:52327
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