《金融市场与机构 Jeff Madura》ch28.pptVIP

28 Credit Unions Chapter Objectives Describe the main sources and uses of funds for credit unions Present the terms and concepts related to credit unions Describe how credit unions are regulated Describe how credit unions are exposed to various forms of risk Evaluate the performance of credit unions Background of Credit Unions Credit Unions (CUs) are nonprofit, mutual organizations Members have a common bond such as an affiliation with Labor union Church University Residential area There are about 10,000 credit unions in the U.S. with approximately 20 million members Total assets of CUs are less than one tenth the amount in commercial banks Background of Credit Unions Ownership of credit unions Credit unions do not issue stock Owned by depositors Deposits are called shares, and the interest paid is called dividends Because they are nonprofit organizations their income is not taxed They can be either federally or state chartered Background of Credit Unions Objectives of credit unions Satisfy their members Offer interest on share deposits Offer loans to members What about earnings that the CU accumulates? Offer higher rates on deposits Offer lower rates on loans Advertising costs Background of Credit Unions Size of Credit Unions A few CUs have assets of more than $1 billion (e.g. the Navy Federal CU) Most, however, are very small Advantages of credit unions Pay no federal income taxes Employer-supported facilities Exempt from anti-trust laws Powerful grass-roots lobby and trade associations Credit Union Disadvantages Limited diversification Economic risks impact funds providers and borrowers High liquidity needs Concentrated default risk Management Concerns Internal controls—separation of duties Volunteers vs. professionals Small Entities Difficult to attain scale economies Sources of Credit Union Funds CUs obtain most funds through share deposit by members Similar to passbook savings Insured up to $100,000 CUs also offer share certificates Compete with CDs from co