Determinants of Credit Union Benefits to Members

Abstract

Credit unions (CUs) are “not-for-profit” entities owned by members, providing benefits in the form of dividends and lower loan rates. Thus, CU performance is defined by the benefits provided to members. Previous theory suggests the percent dividend return per share and the difference between interest earned on loans and interest and dividends paid on shares and deposits are measures of member benefits. The findings indicate benefits depend on increased efficiency, increasing competitiveness of the CU, less noninterest income and more focus on lending, larger asset size, more monitoring by uninsured depositors, higher risk, and better screening and monitoring of borrowers.