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Regulatory change and capital adjustment of US credit unions

Research output: Contribution to journalArticlepeer-review

Author(s)

John Goddard, Donal McKillop, John O. S. Wilson

School/Research organisations

Abstract

We investigate the determinants of US credit union capital-to-assets ratios, before and after the implementation of the current capital adequacy regulatory framework in 2000. Capitalization varies pro-cyclically, and until the financial crisis credit unions classified as adequately capitalized or below followed a faster adjustment path than well capitalized credit unions. This pattern was reversed, however, in the aftermath of the crisis. The introduction of the PCA regulatory regime achieved a reduction in the proportion of credit unions classified as adequately capitalized or below that continued until the onset of the crisis. Since the crisis, the speed of recovery of credit unions in this category following an adverse capitalization shock was sharply reduced.
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Details

Original languageEnglish
Pages (from-to)29-55
JournalJournal of Financial Services Research
Volume50
Issue number1
Early online date26 Apr 2015
DOIs
Publication statusPublished - Aug 2016

    Research areas

  • Credit unions, Banking, Capital ratios, Pro-cyclical, Prompt Corrective Action, Regulation

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