Three essays on the economics of United States credit unions

This dissertation addresses the issue of competition between banks and credit unions in two types of loan markets, namely, the 24-month Unsecured (non-credit card) Loan (USL) and the 48-month New Vehicle Loan (NVL) markets. Our study is limited to a sample of US firms. We have three sections in our study. In the first section, we ran a Granger causality test on bank and credit union loan rates. In the second section, we pooled bank and credit union data together and ran Generalized Least Square (GLS) regressions. In the last section, we tried to conceptualize credit union behavior, assuming a service-maximizing approach and designed a number of empirically testable hypotheses. We found that, credit union and bank loans are substitutable in the sense that they influence each other's price. We also found that the two loan rates, namely the USL and the NVL rates, respond to market variables as well as institution-specific variables. Our empirical findings show significant differences in pricing behavior of banks and credit unions in the NVL market. Credit union loan rates are more influenced by credit union-specific variables, while bank rates respond equally to bank-specific and market variables. We noticed that effects of a number of variables could be explained by assuming a more service-oriented, non-profit behavior of credit unions.