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Deposit insurance and credit union earnings opacity

Author

Listed:
  • Rempoutsika, Lemonia M.
  • Chronopoulos, Dimitris K.
  • Nguyen, Linh
  • Wilson, John O.S.

Abstract

This study examines the impact of deposit insurance coverage on credit union earnings opacity. For identification, we employ the provisions outlined in Section 136 of the Emergency Economic Stabilization Act, which raised the upper limit of deposit insurance coverage from $100,000 to $250,000. Using variation in insured deposits brought about by the differential impact of the change to deposit insurance arrangements and a difference-in-differences approach, we find that credit unions experiencing a substantial rise in insured deposits tend to exercise more discretion over loan loss provisions, leading to an increase in earnings opacity. This is most evident for small and medium sized credit unions.

Suggested Citation

  • Rempoutsika, Lemonia M. & Chronopoulos, Dimitris K. & Nguyen, Linh & Wilson, John O.S., 2024. "Deposit insurance and credit union earnings opacity," The British Accounting Review, Elsevier, vol. 56(6).
    • Handle: RePEc:eee:bracre:v:56:y:2024:i:6:s0890838924002634
    DOI: 10.1016/j.bar.2024.101486
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    More about this item

    Keywords

    Deposit insurance; Earnings opacity; Credit unions; Discretionary loan loss provisions; Emergency Economic Stabilization Act;
    All these keywords.

    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
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship

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