Deposit rate sensitivity of credit union shares

This study examines the factors that are related to the growth of credit union liabilities. We use individual credit union data on deposit categories and their associated interest rates to measure the effect of interest rate changes on the growth rates of total shares and five of its subcomponents....

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Bibliographic Details
Published in:Journal of economics and finance 2009-07, Vol.33 (3), p.259-272
Main Authors: Stern, Liliana V., Swidler, Steve, Hinkelmann, Christoph
Format: Article
Language:English
Subjects:
Commercial banks
Credit Union
Credit unions
Deposit accounts
Economics
Economics and Finance
Finance
G21
Growth rate
Individual retirement accounts
Interest rates
Interest rates-deposits
IRA
Macroeconomics/Monetary Economics//Financial Economics
Money market deposit accounts
Savings
Share Deposits
Studies
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Summary:This study examines the factors that are related to the growth of credit union liabilities. We use individual credit union data on deposit categories and their associated interest rates to measure the effect of interest rate changes on the growth rates of total shares and five of its subcomponents. After controlling for credit union size, previous growth, and market interest rates, we find that while total share growth is related to individual credit union regular share and money market rates, it is most affected by share certificate rates. With the exception of share drafts, the growth in other deposit categories is significantly affected by the interest rate a credit union offers for those particular accounts. Finally, we provide evidence that, in general, the growth rate of a deposit category is negatively related to interest rates offered on other types of accounts.
ISSN:1055-0925
1938-9744
DOI:10.1007/s12197-008-9028-4