The diversification and financial performance of US credit unions

For US credit unions, revenue from non-interest sources has increased significantly in recent years. We investigate the impact of revenue diversification on financial performance for the period 1993–2004. The impact of a change in strategy that alters the share of non-interest income is decomposed into a direct exposure effect, reflecting the difference between interest and non-interest bearing activities, and an indirect exposure effect which reflects the effect of the institution’s own degree of diversification. On both risk-adjusted and unadjusted returns measures, a positive direct exposure effect is outweighed by a negative indirect exposure effect for all but the largest credit unions. This may imply that similar diversification strategies are not appropriate for large and small credit unions. Small credit unions should eschew diversification and continue to operate as simple savings and loan institutions, while large credit unions should be encouraged to exploit new product opportunities around their core expertise.

Which Credit Unions are Acquired?

Recent years have witnessed a wave of consolidation amongst US credit unions. Through hazard function estimations, this paper identifies the determinants of acquisition for credit unions during the period 2001-06. The hazard of acquisition is inversely related to both asset size and profitability, and positively related to liquidity. Growth-constrained credit unions are less attractive acquisition targets. Institutions with low capitalization and those with small loans portfolios relative to total assets are susceptible to acquisition. The investigation presents unique empirical evidence of a link between technological capability and the hazard of acquisition. During the period 2001-06, when there was sustained growth in the use of internet technology, credit unions with no website were at the highest risk of acquisition. © Springer Science + Business Media, LLC 2009.

Irish Credit Unions: Investigating performance determinants and the opportunity cost of regulatory compliance

The study investigates how producer-specific environmental factors influence the performance of Irish credit unions. The empirical analysis uses a two-stage approach. The first stage measures efficiency by a data envelopment analysis (DEA) estimator, which explicitly incorporates the production of undesirable outputs such as bad loans in the modelling, and the second stage uses truncated regression to infer how various factors influence the (bias-corrected) estimated efficiency. A key finding of the analysis is that 68% of Irish credit unions do not incur an extra opportunity cost in meeting regulatory guidance on bad debt.

And We’d Like to Thank…::Romania’s Integration into the European Union, 1989-2007

Conditionality is formally a key determinant of many non-member states’ relations with the EU. It is particularly so for states intent on membership. As the case of Romania shows, the EU’s use of conditionality is far from consistent. Relations can develop and accession take place without the requisite conditions being met. This follows from the use the EU makes of the flexibility evident in its evolving and generally vague definitions of the conditions that need to be met. Hence it was often extraneous factors over which Romania had either limited or no influence that were responsible for key developments in relations. These factors include the geopolitical and strategic interests of the EU and its member states, the actions of the Commission and the agenda-setting and constraining effects of rhetorical commitments and timetables, and the dynamics of the EU’s evolving approach to eastern enlargement.