Deposit insurance and credit union lending
Abstract
We exploit an exogenous change in the coverage of insured deposits following the passage of the Emergency Economic Stabilization Act (2008) to investigate the impact of deposit insurance on the volume, composition and quality of credit union lending. Using a difference-in-difference approach, we find changes in the volume, composition and riskiness of credit union lending. Specifically, we find that affected credit unions increase total and unsecured lending, leading to a decline in loan quality. Overall, our results suggest that an increase in the maximum coverage of insured deposits induces credit unions to lend more at the expense of loan quality.
Citation
Nguyen , L , Wilson , J O S , Le , T , Luu , H N , Nguyen , T-A & Vo , V 2022 , ' Deposit insurance and credit union lending ' , Journal of Financial Stability , vol. 60 , 101003 . https://doi.org/10.1016/j.jfs.2022.101003
Publication
Journal of Financial Stability
Status
Peer reviewed
ISSN
1572-3089Type
Journal article
Rights
Copyright © 2022 Elsevier B.V. All rights reserved. This work has been made available online in accordance with publisher policies or with permission. Permission for further reuse of this content should be sought from the publisher or the rights holder. This is the author created accepted manuscript following peer review and may differ slightly from the final published version. The final published version of this work is available at https://doi.org/10.1016/j.jfs.2022.101003
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