Suchergebnisse

Loan book management is important to community credit union survival, particularly in deprived localities. Consistent with agency theory, prior studies of credit unions report an association among individual monitoring mechanisms, trade association monitoring, and female board representation, respectively, and reduced loan losses. This study provides a more nuanced understanding by investigating the moderating influence of these monitoring mechanisms on the relationship between loan losses and deprivation and by considering the effect of bundle combinations of different levels of the two monitoring mechanisms on loan losses. The results reveal that credit unions subject to trade association monitoring have the lowest loan losses. However, in the absence of trade association monitoring, female board representation has a moderating effect on loan losses as deprivation increases. Finally, trade association monitoring and female board representation have a substitutive, rather than a complementary effect on loan losses.

Credit unions are membership-based cooperative financial services organizations that are run by and for their members. Historically, credit unions provided financial services for their members and encouraged community development through philanthropy and volunteering. The World Council of Credit Unions (WOCCU), the sector's global trade association and development agency, encourages the adoption of a management model, coined "new model," which encourages for-profit financial management practices. The "new model" approach is challenged by some practitioners and academics concerned that it will diminish the community involvement of credit unions. We explore the following research question: "Does the implementation of a management model that promotes for-profit-style financial management crowd out the community impact of credit unions?" We use a dataset extracted from 2,275 annual returns for 188 credit unions spanning 1996-2008, and find no evidence that community impact diminishes as a result of "new model" operating practices, suggesting a crowding-out effect is absent.