The effect of common bond on credit union performance: The case of black-controlled credit unions
This article compares the financial characteristics of black-controlled credit unions by type of common bond. The study found that many of the operational differences of these credit unions can be attributed to institutional characteristics associated with the three distinct types of credit unions. It also found that black credit unions are viable financial institutions, regardless of type of common bond. This finding is linked to the ownership of credit unions by its membership. This unique relationship has implications for black economic development.
BLACK‐CONTROLLED CREDIT UNIONS: A COMPARATIVE ANALYSIS
This paper is a comparative study of black- and nonblack-controlled credit unions. The results indicate operational differences that distinguish black credit unions from previous results for black banks and black savings and loan associations. Many of these differences can be attributed to institutional characteristics resulting from the three distinct types of credit unions. The major contribution of the paper is that the striking similarities between black banks and black savings and loan associations do not in general apply to black credit unions.
Economies of Scale in Credit Unions: Further Evidence
STUDIES ON ECONOMIES OF scale in most financial institutions have consistently found small, but significant economies when employing the Benston-Bell-Murphy cost specification [1, 2, 3, 4, 7, 9]. Yet, when utilizing the same approach, significant non-increasing returns have been discovered for credit unions [5, 6]. Flannery [5] contends that this was because most credit unions receive subsidies in the form of donated office space and equipment from sponsoring organizations and volunteer labor from their members. These subsidized inputs do not enter into their observed costs, and if the degree of subsidization declines with credit union size, then economies might well exist when subsidies are taken into account. However, Koot [6] claims to have found diseconomies of scale, even after correcting for subsidies, thus refuting Flannery's contention. The purpose of this paper is to correct the analysis of Professors Koot and Flannery and shed some light on the apparent anomalous cost conditions between credit unions and other financial institutions.' Specifically, we are able to demonstrate that Koot and Flannery misspecified their empirical cost equations, which when corrected, reverses their results regarding economies of scale. Second, we demonstrate that Koot incorporated labor subsidies incorrectly. Moreover, when subsidies are correctly included, they consistently increase the estimated scale economies, as Flannery predicted.