SSRN Home Search and Download Papers Browse Abstract and Paper Submission Subscribe to Networks View Briefcase Top Papers Top Authors Top Institutions

 

Abstract

 
 

Citations (4)

Beta

 


 



Credit Union Governance and Survival of the Cooperative Form

Kevin Davis
University of Melbourne - Department of Finance



Journal of Financial Services Research, Vol. 19, No. 2/3, April 2001

Abstract:     
Credit unions are cooperative financial institutions that typically operate on a one-member/one-vote governance rule. This paper demonstrates that such a governance rule may enhance the survival of such organizational forms in the face of adverse incentives created by accumulated financial surpluses and identifies factors that may prompt conversion to a joint-stock form. The analysis is based on noting that current members collectively have "inherited" accumulated surpluses of the cooperative from past members. Older members have an incentive to extract maximum personal private benefit from that inheritance by voting to convert from a cooperative to a joint stock company, even though such an outcome may be socially suboptimal. A simple overlapping generations model is used to develop a "sustainability constraint," which must be met if conversion is not to occur and examine how a one-member/one-vote governance rule contributes to the survival of the institution in a cooperative form.

Keywords: credit unions, conversion, governance, cooperatives

Accepted Paper Series

Date posted: October 01, 2001 ; Last revised: October 01, 2001

Suggested Citation

Davis, Kevin Thomas, Credit Union Governance and Survival of the Cooperative Form. Journal of Financial Services Research, Vol. 19, No. 2/3, April 2001. Available at SSRN: http://ssrn.com/abstract=280662


Export to: Export Citation What's this?

Contact Information

Kevin Thomas Davis (Contact Author)
University of Melbourne - Department of Finance ( email )
Parkville, Victoria 3010 Australia
+613 966 1010 (Phone)
+613 8344 6914 (Fax)
Feedback to SSRN (Beta)


Paper statistics
Abstract Views: 1,718
Downloads: 0
Citations: 4

© 2010 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright
This page was served by apollo1 in 0.125 seconds.