Consolidation in the US Credit Union Sector: Determinants of Failure and Acquisition

38 Pages Posted: 6 Aug 2008

See all articles by John Goddard

John Goddard

University of Wales System - Bangor University

Donal G. McKillop

Queen's University Management School

John O. S. Wilson

University of St. Andrews

Date Written: August 4, 2008

Abstract

We examine the determinants of disappearance through liquidation or acquisition for US credit unions during the period 2001-06. The hazard of disappearance is inversely related to both asset size and profitability, and positively related to liquidity. Growth-constrained credit unions are less attractive acquisition targets, but are more likely to fail. Credit unions with low capitalization and those with relatively small loans portfolios are attractive as acquisition targets. We report unique empirical evidence of a link between technological capability and the hazard of disappearance. The absence of an internet banking capability rendered a credit union more vulnerable to acquisition, but did not affect the probability of failure.

Keywords: Credit unions, consolidation, acquisition, failure, technology

JEL Classification: G21

Suggested Citation

Goddard, John and McKillop, Donal G. and Wilson, John O. S., Consolidation in the US Credit Union Sector: Determinants of Failure and Acquisition (August 4, 2008). Available at SSRN: https://ssrn.com/abstract=1200262 or http://dx.doi.org/10.2139/ssrn.1200262

John Goddard

University of Wales System - Bangor University ( email )

Bangor, Gwynedd, Wales LL57 2DG
United Kingdom

Donal G. McKillop

Queen's University Management School ( email )

25 University Square
Belfast, Northern Ireland BT7 1NN
Northern Ireland

John O. S. Wilson (Contact Author)

University of St. Andrews ( email )

North St
Saint Andrews, Fife KY16 9AJ
United Kingdom

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