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


  • Morgan, Horatio M.


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.

Suggested Citation

  • Morgan, Horatio M., 2013. "Credit Unions, Consolidation and Business Formation: Evidence from Canadian provinces," MPRA Paper 52327, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:52327

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    References listed on IDEAS

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    More about this item


    Competition; Consolidation; Credit unions; Business formation; Small business lending;

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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