Credit Unions during the Crisis: Did They Provide Liquidity?

Abstract

Using Consumer Finance Monthly national survey, we demonstrate that credit unions in the US did little to help consumers obtain home equity lines of credit (HELOC) during the recent financial crisis. Our results hold after including a two-stage regression structure using the availability of credit unions as the identifying instrument. Use of Heckman procedure to adjust for possible sample selection bias does not alter our findings. Additionally there is no evidence to suggest that low income households residing in states experiencing housing price declines received more HELOC from CUs. Since credit unions are sometimes lauded for providing liquidity during times of crisis and helping to serve those who are otherwise less able to obtain funds, our results provide an empirical counterpoint to this common conception.

Keywords: Credit Union, Home Equity Line of Credit, Liquidity, Financial Distress

JEL Classification: G21