Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/203456
Authors: 
Ewerhart, Christian
Zubrickas, Robertas
Year of Publication: 
2019
Series/Report no.: 
Working Paper 332
Abstract: 
We model the financial cooperative as an optimal institution sharing liquidity risks among agents with social preference and group identity. Stronger social concerns imply objectively better (worse) conditions for borrowers (depositors). Testing the model, we find that, indeed, deposit and loan rates offered by U.S. credit unions between 1995 and 2014 co-moved with (i) the number of members, and (ii) the common bond. Our theory explains how cooperatives coexist with banks, and why they have tended to be more resilient. However, the analysis also suggests that financial inclusion and advantages in resilience might quickly evaporate as membership requirements get diluted.
Subjects: 
social preferences
group identity
liquidity insurance
cooperative banking
credit union
common bond
bank competition
resilience
JEL: 
G21
D91
L31
G28
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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