Credit Unions: A Theoretical and Empirical Overview

In 2009 there were over 49,330 credit unions across 98 countries with more than 184 million members and approximately $1,354 billion in assets. There is a great diversity within the credit union movement across these countries. This reflects the various economic, historic and cultural contexts within which credit unions operate. This paper traces the evolution of the credit union movement. It examines credit union objectives, and considers issues relating to efficiency, technology adoption, product diversification, merger, failure and demutualization. The regulatory environment within which credit unions operate is also explored under the themes of interest rate regulation, common bond requirements, taxation, deposit insurance and capital regulation. The overview also considers demutualization and the costs and benefits to credit unions of altering their organizational form.

Bank Failures of the 1990s::An Exploratory Analysis

Past research has frequently attributed the incidence of bank failures to macroeconomic cycles and/or downturns in the regional economy. More recent analyses have suggested that the incidence and severity of bank failures can be linked to governance failures, which may be preventable through more stringent disclosure and auditing requirements. Using data on bank failures during the years 1991 to 1997, for the US, Canada, the UK and Germany, this study examines the relationship between institutional characteristics of national legal and auditing systems and the incidence of bank failures. In the second part of our analysis we then examined the relationship between the same institutional variables and the severity of bank failures.
The first part of our study notes a significant correlation between the law and order tradition (‘rule of law’) of a national legal system and the incidence of bank failures. Nations which were assigned high 'rule of law’ scores by country risk guides appear to have been less likely to experience bank failures. Another variable which appears to impact on bank failure rates is the ‘risk of contract repudiation’. Countries with a greater ‘risk of contract repudiation’ appear to be more likely to experience bank failures. We suggest that this may be due to a greater ex ante protection of stakeholders in countries where contract enforcement is more stringent.
The results of the second part of our study are less clear cut. However, there appears to be a significant correlation between the amount paid out by national deposit insurers (our proxy for the severity of bank failures) and the macroeconomic variable 'GDP change'. Here our findings follow the conventional wisdom; with greater amounts of deposit insurance funds being paid during economic downturns (i.e. low or negative GDP 'growth' correlates with high amounts of deposit insurance being paid out). A less pronounced relationship with the severity of bank failures can also be established for the institutional variables ' accounting standards' as well as 'risk of contract repudiation'. Countries with more stringent ‘accounting standards’ and a low ‘risk of contract repudiation’ appear to have been less prone to severe bank failures.

International Coordination in Cross-Border Bank Bail-ins: Problems and Prospects

Bail-in is quickly becoming a predominant approach to banking resolution. The EU Bank Recovery Resolution Directive and the US Federal Deposit Insurance Corporation’s single point of entry strategy envisage creditors’ recapitalisations
to resolve a failing financial institution. However, this legislation focuses on the domestic aspects of bail-in, leaving the question of how it is applied
to a cross-border banking group open. Cross-border banking resolution has been historically subject to coordination failures, which have resulted in disorderly resolutions with dangerous systemic effects. The goal of this article is to assess whether bail-in is subject to the same coordination problems that affect other resolution tools, and to discuss the logic of international legal cooperation in bail-in policies. We demonstrate that, in spite of the evident benefit in terms of fiscal sustainability, bail-in suffers from complex coordination problems which, if not addressed, might lead to regulatory arbitrage and lengthy court battles, and, ultimately, may disrupt resolutions. We argue that only a binding legal regime can address those problems. In doing so, we discuss the recent Financial Stability
Board’s proposal on cross-border recognition of resolution action, and the role of international law in promoting cooperation in banking resolution.

How Does the Unemployment Insurance System Shape the Time Profile of Jobless Duration?

This paper updates a sparse literature on the effects of unemployment benefits (UB) on the time profile of escape rates from unemployment. These effects, as well as those of other regressors, are found to vary profoundly over the course of unemployment.

Self-affine crossover length in a layered silicate deposit

Self-affine dehydrated colloidal deposits on fresh mica surfaces of the synthetic layered silicate 2:1 smectite clay laponite have been studied by means of atomic force microscopy (AFM). AFM images of these prepared assemblies of sol and gel aggregates have been analyzed both by means of standard AFM Fourier software and a wavelet method. The deposited surfaces show a persistence to antipersistent crossover with a clay concentration dependent crossover length. It is concluded that the crossover length is associated with aggregate size, and further that the persistent roughness at small length scales signals near compact clusters of fractal dimension three, whereas the antipersistent roughness at large length scales signals a sedimentation process.

Finite element analysis of an embankment on a soft estuarine deposit using an elastic–viscoplastic soil model

A new elastic–viscoplastic (EVP) soil model has been used to simulate the measured deformation response of a soft estuarine soil loaded by a stage-constructed embankment. The simulation incorporates prefabricated vertical drains installed in the foundation soils and reinforcement installed at the base of the embankment. The numerical simulations closely matched the temporal changes in surface settlement beneath the centerline and shoulder of the embankment. More importantly, the elastic–viscoplastic model simulated the pattern and magnitudes of the lateral deformations beneath the toe of the embankment — a notoriously difficult aspect of modelling the deformation response of soft soils. Simulation of the excess pore-water pressure proved more difficult because of the heterogeneous nature of the estuarine deposit. Excess pore-water pressures were, however, mapped reasonably well at three of the six monitoring locations. The simulations were achieved using a small set of material constants that can easily be obtained from standard laboratory tests. This study validates the use of the EVP model for problems involving soft soil deposits beneath loading from a geotechnical structure.