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Uninsured deposits and excess share insurance at US credit unions: the impact on risk and returns to members

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  • Shane A. Van Dalsem

    (Washburn University)

Abstract

Using NCUA credit union call report data, I find that uninsured depositors and excess share insurers provide valuable monitoring benefits for credit unions for the years following the 2008 financial crisis. I find that the capital ratio, liquidity ratio, and delinquencies-to-total loans and leases decrease with an increase in the percentage of deposits that exceed the $250,000 per depositor regulatory threshold of standard deposit insurance. The influence of uninsured depositors is generally more significant for small credit unions than large credit unions. The results for the precrisis period are not consistent with those of the postcrisis period. However, the results are consistent across the six-year period following the financial crisis. Overall, the results are consistent with the hypothesis that uninsured depositors are value-maximizing stakeholders who exercise control over the firm.

Suggested Citation

  • Shane A. Van Dalsem, 2017. "Uninsured deposits and excess share insurance at US credit unions: the impact on risk and returns to members," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 41(4), pages 714-738, October.
    • Handle: RePEc:spr:jecfin:v:41:y:2017:i:4:d:10.1007_s12197-016-9376-4
    DOI: 10.1007/s12197-016-9376-4
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    Cited by:

    1. Naaman, Christine & Magnan, Michel & Hammami, Ahmad & Yao, Li, 2021. "Credit unions vs. commercial banks, who takes more risk?," Research in International Business and Finance, Elsevier, vol. 55(C).
    2. Saulo Cardoso Maia & Gideon Carvalho Benedicto & José Willer Prado & David Alastair Robb & Oscar Neto Almeida Bispo & Mozar José Brito, 2019. "Mapping the literature on credit unions: a bibliometric investigation grounded in Scopus and Web of Science," Scientometrics, Springer;Akadémiai Kiadó, vol. 120(3), pages 929-960, September.

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    More about this item

    Keywords

    Credit unions; Uninsured deposits; Excess shares; Agency theory; Corporate governance;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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