The federal deposit insurance fund that didn't put a bite on U.S. taxpayers
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Cited by (33)
The relevance of traditional and non-traditional borrower data in predicting default in financial co-operatives
2023, Journal of Co-operative Organization and ManagementDeposit insurance and credit union lending
2022, Journal of Financial StabilityCitation Excerpt :Early evidence suggests that the introduction of federal deposit insurance increased the risk of US credit unions (Black and Dugger, 1981; Clair, 1984). However, Kane and Hendershott (1996) note that the NCUSIF performed better than the FDIC deposit insurance fund throughout the 1980 s, thus providing no evidence for moral hazard at credit unions. The authors attribute these findings in large part to the design of the NCUSIF, which discouraged excessive risk taking by requiring credit unions to keep one per cent of insured deposits with the NCUSIF and accept liability for an additional premium if fund reserves decline below regulatory minima.
The risk implications of the business loan activity in credit unions
2021, Journal of Financial StabilityCitation Excerpt :Other CUs may be a particularly relevant example of such sophisticated deposits with ex-ante incentives for monitoring a CU. Even though CUs rely on the NCUA (or the state supervisor) as the main active monitor of other CUs, NCUSIF-insured credit unions act as coinsurers of one another: all institutions insured by NCUSIF are responsible for curing any shortage the fund might develop (Kane and Hendershott, 1996). This co-responsibility, which expands the effective size of the NCUSIF fund, strengthens the incentives for CUs to cross-monitor one another.20
Bank asset structure and deposit insurance pricing
2020, Journal of Banking and FinanceCitation Excerpt :This would force banks to monitor their neighbors to make sure their neighbors are not taking on too much risk while still providing an insurance fund that is backed by tax dollars and not subject to default. A similar notion is to require banks to form coinsurance groups that would encourage monitoring while simultaneously reducing losses to the government insurance fund (Kane and Hendershott, 1996). Additional monitoring may also be achieved by mandating that some level of uninsured deposits are long-term in nature (Diamond and Dybvig, 1986) or through the use of subordinated debt (Kane and Hendershott, 1996).
The policy impact of new rules for loan participation on credit union returns
2016, Journal of Banking and FinanceCitation Excerpt :Credit unions in the United States are made up of members who share common bonds, which may be based on their occupations, some other association, or the geographic area in which they live.1 The close ties between credit unions and their memberships may provide insight into lending decisions because of the availability of information that may have otherwise been private (Kane and Hendershott, 1996). These ties significantly limit lending opportunities of credit unions to a relatively homogeneous and narrow market segment.
The effect of mergers on credit union performance
2009, Journal of Banking and Finance