Who Could We Blame? The Impact of Strategic Orientations on the Failure of Financial Institutions

2021 ◽  
pp. 2150011
Author(s):  
Xuan Vinh Vo ◽  
Tuan Quoc Le ◽  
Thi Lam Anh Nguyen ◽  
Hiep Ngoc Luu
Keyword(s):  
Financial Institutions ◽  
Failure Probability ◽  
Operating Experience ◽  
Credit Unions ◽  
Credit Union ◽  
Operational Strategies ◽  
Strategic Orientations ◽  
The Us ◽  
Interest Margins ◽  
The Impact

We evaluate the impact of strategic orientation on the failure probability of financial institutions. Using the US credit union industry as the empirical setting, we find that credit unions which exhibit preferential treatment to borrowers are more likely to fail, whereas those who set operational strategies towards balancing the benefits between savers and borrowers experience a lower failure probability. The impacts appear to be more pronounced in small credit unions and in credit unions which have a lower operating experience. We also find that borrower-oriented credit unions generate lower interest margins while neutral behavior credit unions generate higher margins.

Value proposition preferences of credit union members and patronage activity

2014 ◽  
Vol 32 (6) ◽  
pp. 567-589 ◽  
Author(s):  
Noreen Byrne ◽  
Olive McCarthy
Keyword(s):  
Financial Institutions ◽  
Financial Services ◽  
Credit Unions ◽  
Credit Union ◽  
Value Proposition ◽  
Content Type ◽  
Relational Value ◽  
Emotional Value ◽  
The Impact ◽  
The Relationship

Purpose – The purpose of this paper is to examine the technical and relational value proposition preferences of credit union members and to examine the relationship between their preference and patronage activity. Design/methodology/approach – A total of 800 members of credit unions were surveyed. Exploratory factor analysis was used and four factors were extracted incorporating technical and relational dimensions of the credit union service. Member value proposition preferences are examined and the relationship to patronage activity of the credit union was explored. Findings – The majority of members express a higher or equal preference for a relational rather than a technical value proposition. Those that express a greater or equal preference for relational value are more likely to have a higher level of patronage activity. Research limitations/implications – Credit unions are member-owned financial institutions and hence the study is context dependent. Credit unions are member-owned financial institutions and hence relational value may be more significant than in the case of non-member owned entities. Practical implications – The research highlights the importance of consideration of relational value in financial services entities whose competitive advantage lies in the relational. In terms of the credit union, the impact on the relational value proposition of the credit union must be considered in the design and implementation of industry restructuring. Originality/value – This paper extends the emotional value and interactive quality construct to incorporate a greater relational focus which the paper suggests is of greater relevance to high-contact financial services. The research in this paper also extends beyond the criticised static focus of consumer perceived scales (consumer perceived value) and the episode focused service quality scales. Hence, it has a more longitudinal and holistic focus. The paper also incorporates a preference between benefits approach rather than an evaluative or trade-off between benefits and costs framework.

Early Intervention

2016 ◽  
Author(s):  
Michael Schillig
Keyword(s):  
Early Intervention ◽  
Financial Institutions ◽  
Financial Stability ◽  
Corrective Action ◽  
Viable Alternative ◽  
Prompt Corrective Action ◽  
Systemic Risks ◽  
The Us ◽  
The Uk ◽  
The Impact

The Financial Stability Board recommended that all national supervisors should have the mandate and powers to identify risks and intervene early in order to prevent unsound practices and take appropriate measures to reduce the impact of potential stresses on financial institutions and to safeguard against systemic risks. Accordingly, the BRRD and SRM contain new powers for the competent authorities to intervene early before an institution’s financial and economic situation has deteriorated to a point where resolution is the only viable alternative. The chapter starts with some theoretical reflections, focusing on the incentives of the actors involved. It then discusses the early intervention framework under BRRD and SRM and national transposition in the UK and Germany. It also covers the US prompt corrective action framework and early remediation under Dodd–Frank.

scholarly journals The impact of the GST on mortgage pricing of Australian credit unions

2014 ◽  
Vol 27 (1) ◽  
pp. 37-51 ◽  
Author(s):  
Benjamin Liu ◽  
Allen Huang ◽  
Brett Freudenberg
Keyword(s):  
Credit Unions ◽  
Multivariate Regression Analysis ◽  
Yield Spreads ◽  
Content Type ◽  
Goods And Services ◽  
Mortgage Pricing ◽  
Effective Yield ◽  
Interest Margins ◽  
The Impact ◽  
First Time

Purpose – The purpose of this paper is to investigate the impact of the Goods and Services Tax (GST) on mortgage pricing and to measure the GST shifting ratio of Australian credit unions. Design/methodology/approach – Using the proprietary data from 79 credit unions in Australia, we perform multivariate regression analysis on the effect of the GST on mortgage effective yield spreads and interest margins, respectively. We also introduce a model that is used to measure the GST shifting ratio. Findings – We document that the introduction of the GST in July 2000 led to the substantial rise in mortgage costs charged by credit unions in the post-GST periods. Overall, the GST alone contributed to the increase of effective yield spreads and interest margin by 65.3 and 70.1 basis points, respectively. As measured by the GST-shifting ratio, credit unions passed more than twice of the GST rate. This suggests GST over-shifting, and it is generally consistent with tax over-shifting literature. Originality/value – This is the first time the GST shifting ratio has been robustly measured with the use of multivariate models on mortgage costs.

scholarly journals Bridging the Gap? Government Subsidized Lending and Access to Capital

2013 ◽  
Vol 2 (1) ◽  
pp. 98-128 ◽  
Author(s):  
Kristle Romero Cortés ◽  
Josh Lerner
Keyword(s):  
Community Development ◽  
Financial Institutions ◽  
Regression Discontinuity ◽  
Financial Institution ◽  
Credit Unions ◽  
Credit Union ◽  
First Year ◽  
Public Funds ◽  
Union Activity

The consequences of providing public funds to financial institutions remain controversial. We examine the Community Development Financial Institution (CDFI) Fund’s impact on credit union activity, using hitherto little studied U.S. Treasury data. The CDFI Fund grants increase lending at credit unions by 3%. For every dollar awarded, 45 additional cents are loaned out to borrowers in the first year, and up to an additional $1.60 is loaned out within three years. Delinquent loan rates also increase slightly. Our panel results are supported by a broadband regression discontinuity analysis. Politics does not seem to play a role in allocating funding. (JEL G28)

Income structure, diversification strategy and owners’ benefit in cooperative financial institutions

2020 ◽  
Vol 16 (4) ◽  
pp. 481-500
Author(s):  
Hoang Van Cuong ◽  
Hiep Ngoc Luu ◽  
Loan Quynh Thi Nguyen ◽  
Vu Tuan Chu
Keyword(s):  
Financial Institutions ◽  
Credit Unions ◽  
Credit Union ◽  
Least Square ◽  
Policy Implications ◽  
Diversification Strategy ◽  
Income Diversification ◽  
Significant Drop ◽  
Content Type ◽  
Common Bond

PurposeThe purposes of this paper are twofold. First, it analyses the income structure in cooperative financial institutions and examines how traditional and non-traditional incomes are related. Second, it evaluates whether increasing diversification towards non-traditional incomes facilitates or hampers the benefits of financial cooperative owners.Design/methodology/approachData are collected from over 3,100 US credit unions over the period of 1994–2016. A number of modern econometric techniques are employed throughout the analysis, including the use of panel fixed effect, generalised method of moments (GMM) and two-stage least square (2SLS) methodologies.FindingsUsing US credit unions as the empirical setting, the empirical results reveal that the expansion of traditional income leads to a corresponding increase in income from non-traditional activities. However, an increasing reliance on non-traditional income causes a significant drop in interest margins. The authors also find that the extent to which income diversification affects owner benefit varies across credit union types and period of time. While income diversification negatively affects owners' benefits in single common bond credit unions, it has no significant influence on multiple common bond and community credit union owners' benefits. Third, diversification can be beneficial during crisis time, but can be detrimental to owner benefit during normal time.Originality/valueThis paper provides some of the first empirical investigations on the diversification strategy of cooperative financial institutions. Therefore, the results offer significant policy implications for policymakers and market participants on whether financial cooperatives should diversify or specialise.

scholarly journals Decisions in Finance Management at Polish Financial Institutions - Credit Unions and the National Credit Union

Ekonomika ◽  
2007 ◽  
Vol 80 ◽  
Author(s):  
Leszek Kędzierski
Keyword(s):  
World War Ii ◽  
Financial Institutions ◽  
Credit Unions ◽  
Credit Union ◽  
Present Moment ◽  
Internal Factors ◽  
Investment Activity ◽  
Financial Decisions ◽  
Finance Management ◽  
The 19Th Century

Crediting financial institutions (financial co-operatives) on Polish territories began functioning in the 19th century. They performed duties also in the period of the 2nd Republic of Poland. After World War II, credit unions were subjected to various organizational transformations. Their regeneration in Poland took place early in the 1990s in the shape of the credit unions. The non-banking financial institutions in Poland - credit unions and the National Credit Union - take investment and financial decisions. These decisions deal with finance management. Investment decisions are not a uniform category. One can group them on various bases. The credit unions and the National Credit Union may take up various attitudes towards the investment risk. Financial decisions are determined by operational and investment activity of the mentioned financial institutions. The scope of investment and financial decisions of credit unions and the National Credit Union is different. There are external and internal factors, as well as mixed internal-external factors influencing at the present moment the investment and financial decisions of credit unions and the National Credit Union. Future changes within the investment and financial decisions of credit unions and the National Credit Union in Poland may be determined, among other factors, by the accepted model of development of these financial institutions (Model of QuantityQuality Changes - MQQC or Banking Model - BM).

Are strategic orientations and managerial characteristics drivers of performance in the US wine industry?

2018 ◽  
Vol 30 (1) ◽  
pp. 42-57 ◽  
Author(s):  
Armand Gilinsky ◽  
Sandra Newton ◽  
Robert Eyler
Keyword(s):  
Organizational Structure ◽  
Firm Size ◽  
Wine Industry ◽  
Firm Age ◽  
Content Type ◽  
Staffing Levels ◽  
Strategic Orientations ◽  
The Us ◽  
The Impact ◽  
Profit Growth

Purpose The purpose of this study is to investigate the impact of strategic orientations and managerial characteristics on the performance of wine businesses in the US wine industry. Also considered is the power of firm size as measured by production and firm age since founding, as moderating variables that could attenuate or heighten their impact. Design/methodology/approach Data were gathered via an online survey, where 306 representatives of the US wineries responded. Data are analyzed using descriptive statistics, multinomial logistic regression, cross-tabulations and Pearson chi-square (χ2) analysis. Findings Wine businesses that reported increased sales and profits over the previous three years made significant changes to organizational structure and staffing levels. Wineries that reported flat or decreasing sales and profits were less apt to make changes in organizational structure or staffing levels. Firm age was found to mediate performance in terms of incremental sales and profit growth; firm size was found to mediate only incremental profit growth. Practical implications Developing skills in marketing, strategic planning and entrepreneurial thinking to build a defensible industry position and to create the staffing and structure to support that position appear to be of great importance to wine businesses. Originality/value This study develops and tests a model investigating how firm size and age impact strategic orientations and managerial characteristics on the performance of the US wine businesses. This study investigates which strategic orientations and managerial characteristics wine businesses need to be successful in the future.

scholarly journals The Lithuanian Credit Union Reform Evaluation

2020 ◽  
Vol 83 (1) ◽  
pp. 57-71
Author(s):  
Edita Jurkonytė ◽  
Mindaugas Vijūnas
Keyword(s):  
Essential Element ◽  
Credit Unions ◽  
Credit Union ◽  
Union Sector ◽  
The Law ◽  
The Impact

AbstractAmendments to the Law on Credit Unions in Lithuania, as an essential element of the restructuring of the Credit Union Sector, entered into force in 2018, therefore it is getting relevant to assess the impact of these changes on the whole Sector from the perspective of Credit Union experts.

A methodology for enterprise-wide risk assessment in small banks and credit union

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Philippa Duncan
Keyword(s):  
Risk Assessment ◽  
Risk Management ◽  
Money Laundering ◽  
Financial Institutions ◽  
Rapid Evolution ◽  
Credit Unions ◽  
Credit Union ◽  
Content Type ◽  
Financial Crimes ◽  
Compliance Program

Purpose This paper aims to provide an easy to follow, practical guide for small traditional banks and credit unions to conduct an enterprise-wide risk assessment of the financial institution’s anti-money laundering compliance program. Design/methodology/approach Information was collected from relevant documents published by global standard setters in the disciplines of anti-money laundering, financial crime prevention and risk management. The data was integrated with common challenges experienced by small financial institutions to produce an application-based guide that practitioners can readily implement. Findings Though not a new concept, macro-level financial crises and institutional level financial crimes have influenced the rapid evolution of risk management in financial institutions over the past three decades. Small unsophisticated banks and credit unions are expected to now perform an internal risk assessment. An abundance of information is available on risk assessment, but small institutions remain challenged in finding a turnkey document that is readily actionable to stimulate a less arduous undertaking, especially given the institutions’ limited resources. Research limitations/implications The setting reflects small deposit-taking institutions with traditional services. It is tailored for easy understanding and practical use by the institutions. Originality/value This could influence small institutions to conduct enterprise-wide risk assessments and formulate and use more specific risk management policies.

The US department of labor’s final “fiduciary” rule incorporates concessions to financial service industry but still poses key challenges

2016 ◽  
Vol 17 (4) ◽  
pp. 1-22
Author(s):  
Kenneth J. Laverierre ◽  
Matthew H. Behrens
Keyword(s):  
Financial Institutions ◽  
Asset Management ◽  
Financial Services ◽  
Service Industry ◽  
Content Type ◽  
Individual Retirement Accounts ◽  
The Us ◽  
Investment Advice ◽  
Management Recommendations ◽  
The Impact

Purpose To describe the main provisions of the US Department of Labor’s final “fiduciary” rule and its related prohibited transaction exemptions and the key challenges the rule poses for financial advisers. Design/methodology/approach This article describes the impact of the new “fiduciary” rule on broker-dealers, banks and other financial organizations who will, for the first time since the passage of ERISA, be subject to ERISA’s fiduciary standards and remedies when providing investment and asset management recommendations to individual retirement accounts and other retail retirement clients. Findings The most immediate impact of the rule will be on the compensation practices at broker-dealers and other financial institutions and on the fee and revenue sharing arrangements among funds, fund sponsors and the financial institutions that offer investment advice to retail retirement clients. Although the new rule responds to many of the concerns raised by the financial services industry, compliance with the rule will require the restructuring of pay and compliance policies at financial institutions servicing retail clients. Originality/value Practical guidance from experienced ERISA lawyers.

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