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The Determinants of Credit Union Failure: Insights from the United Kingdom

Author

Listed:
  • Jamie Coen

    (Bank of England, London School of Economics)

  • William B. Francis

    (Bank of England)

  • May Rostom

    (Bank of Canada)

Abstract

We use a proprietary data set on credit unions from the United Kingdom to develop an early-warning model of credit union failure. We find that a small set of financial attributes related to capital adequacy, asset quality, earnings performance, and liquidity, augmented with unemployment rates, reliably identifies failures within one year. Our results support the existing literature which, to date, has largely relied on data from the United States. This work therefore provides further evidence for establishing early-warning criteria for use by international regulators.

Suggested Citation

  • Jamie Coen & William B. Francis & May Rostom, 2019. "The Determinants of Credit Union Failure: Insights from the United Kingdom," International Journal of Central Banking, International Journal of Central Banking, vol. 15(4), pages 207-240, October.
  • Handle: RePEc:ijc:ijcjou:y:2019:q:4:a:6
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    Citations

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    Cited by:

    1. Sanders, Austen & Willison, Matthew, 2021. "Measure for measure: evidence on the relative performance of regulatory requirements for small and large banks," Bank of England working papers 922, Bank of England.
    2. Pål M Vik & Joanna Curtis & Karl T Dayson, 2023. "The impact of COVID-19 on UK community finance institutions – Implications for local economic development," Local Economy, London South Bank University, vol. 38(5), pages 423-442, August.

    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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