Search results

This article explores the size‐growth relationship for a panel of large US credit unions, using the panel unit root tests of Im et al. (2003) and Maddala and Wu (1999). The reference point is Gibrat’s Law, or the Law of Proportionate Effect, according to which firm growth rates are independent of firm sizes. The panel unit root tests are applied to the log as sets and log membership series of a sample of 997 surviving credit unions which reported data over the period 1993 to 2002. In each case the panel unit root tests fail to reject the null hypothesis of non‐stationarity in the logarithmic size series for all credit unions. The implication is that credit union sizes follow random walks, producing a tendency for industry concentration to increase in the long term. With many of the largest institutions currently offering portfolios of products and services similar to those of commercial banks and other financial institutions, these implications of the panel unit root test results appear consistent with observed patterns within the sector in recent years.

This study uses a stochastic frontier analysis to evaluate the relative performance of UK credit unions over the period 1991 to 2001. The analysis found that UK credit unions are subject to high levels of (gross) in efficiency. The analysis also revealed that the environment within which individual credit unions operate plays a critical role in the relative efficiency of credit unions. In terms of direction of influence, the analysis of environmental effects highlighted (main in sights) that larger credit unions are more cost efficient as are credit unions which do not draw their membership exclusively from areas of high deprivation. These directional influences were viewed as offering some encouragement to the thrust of the Financial Services Authority’s new policy regime for credit unions which may well result in a smaller number of larger credit unions each with a more varied membership mix.

The purpose of this paper is to explore why credit unions might need deposit insurance, how they might respond to its introduction and how this protection mechanism should be designed. The objective is to determine how successful the deposit insurance scheme has been in the context of Northern Ireland and whether it offers an alternative to the public provision of deposit insurance which appears to have been the model adopted by credit union movements elsewhere.

As part of this analysis the paper considers the Northern Ireland experience where a subset of credit unions has been members of a private insurance arrangement since 1989.

The deposit insurance mechanism did not cause a propensity for member credit unions to engage in risk shifting behaviour. The analysis suggests that at present a universal blueprint in deposit insurance design may well be unnecessary in combating risk shifting behaviour.

This paper helps to fill a gap in the banking and finance literature where the study of deposit insurance in the context of credit unions has been given little attention.

While existing UK studies conduct a cross‐sectional analysis, this paper seeks to argue that the ratio of Executive Directors to non‐executive director (NED) on the boards of UK firms, coupled with a gradual appointment process, motivated by firms’ desire to comply with the recommendations of the Cadbury report, has the potential to produce a temporal effect.

Data for this study were collected from January 1990 to May 2000.

The empirical analysis suggests that a temporal pattern does exist. Two distinct periods were identified. In the initial period, prior to March 1998 the market viewed NED appointments favourably. After March 1998 NED appointments were no longer significant economic events. Overall, it appears that the market viewed the appointment of NEDs to the boards of FTSE 350 firms favourably; suggesting that such appointees were viewed as a significant input by firms as they attempted to achieve an optimal corporate governance mix.

This paper contributes to the small body of literature on the market's perception of the value of non‐executive, outside, director appointments to FTSE‐350 firms from 1990 to 2000.