US Credit Unions: Survival, Consolidation and Growth

Abstract

This paper uses hazard function estimations together with cross-sectional growth regressions to examine the impact of exit through merger and acquisition (M&A) or failure, and internally-generated growth, on the firm-size distribution of the US credit union industry. Consolidation through M&A was the principal cause of a reduction in the number of credit unions, but impact on concentration was small. A positive relationship between size and growth, and a pattern of positive persistence in growth, reflects a divergence in the population size distribution. Divergence between average internally-generated growth of smaller and larger credit unions was the principal driver of the rise in concentration.

Keywords: Acquisition, Credit Unions, Entry, Exit, Failure, Gibrat’s Law

JEL Classification: G21