Assistant Professor of Finance and Economics, School of Management, Boston University. This paper is based on the third chapter of my doctoral dissertation at the University of California at Berkeley. The research was partially funded by a Dean Witter Grant in Finance. I thank my dissertation committee, Robert A. Meyer, Jr., David H. Pyle, and James L. Pierce, and an anonymous referee for this journal for the many useful suggestions and comments.
A Theoretic Framework for the Analysis of Credit Union Decision Making
Article first published online: 30 APR 2012
1984 The American Finance Association
The Journal of Finance
Volume 39, Issue 4, pages 1155–1168, September 1984
How to Cite
SMITH, D. J. (1984), A Theoretic Framework for the Analysis of Credit Union Decision Making. The Journal of Finance, 39: 1155–1168. doi: 10.1111/j.1540-6261.1984.tb03899.x
- Issue published online: 30 APR 2012
- Article first published online: 30 APR 2012
This paper presents a formal theoretic framework to analyze credit union interest rates on loans and savings deposits. The unique motivational and institutional features of a credit union, in particular its structure as a financial service cooperative, are used to develop the objective function. This is based on a comparison of the credit union's rates to alternatively available market rates and includes parameters to recognize the possibility of borrower-saver conflict. The principal result is that the optimal rates and reactions to exogenous changes depend critically on the preference of the organization toward financial gain to the borrowing and saving members.