Does Credit Union Merger Benefit Members?
Yu, Shiming 1993-
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During past few decades, due to financial deregulation, the banking industry experienced a considerable amount of consolidation. To study whether members benefit from a merger, we examined the impacts of mergers that took place in the U.S. from 2002 to 2015 on operating performance (profitability and cost efficiency), average loan and deposit interest rates, credit supply and loan portfolio. Employing propensity score matching strategy to mitigate possible selection bias, we did not find evidence that mergers provide benefits to members of the acquiring credit unions. Compared with the matched non-merging peers, acquiring credit unions obtain less improvement on profitability for the first year after the merger and also do not show any improvement in cost efficiency. Acquiring credit unions members do not attain any superior benefits on interest rates (neither deposit nor lending rate). Moreover, we observe a larger contraction in credit supply with a decrease in unsecured credit card loans and real estate loans, compared to what is provided by similar credit unions who do not go through mergers in the same period. Our study fills the gap of literature by attaching attention to member benefits in credit union mergers, especially in the regards of interest rates, credit supply and loan portfolio composition.
DegreeMaster of Science (M.Sc.)
CommitteeMaung, Min; Mishra, Dev; Alam, Shamsul
Copyright DateNovember 2019