Filene Report: ‘Financial Firestorm’ Posted by AVCU on 9:10 AM

The Filene Research Institute has recently made available their latest informative publication, “Withstanding a Financial Firestorm: Credit Unions vs. Banks.” Authored by David M. Smith, PhD, associate professor of economics in the Graziadio School of Business and Management at Pepperdine University, and Stephen A. Woodbury, PhD, professor of economics at Michigan State University, the report examines the effects of unemployment within the financial marketplace at both types of institutions.

According to a recently issued posting on the report, research from Smith and Woodbury produced the following talking points:

• Credit unions are less sensitive to the business cycle than banks. Both certainly suffer when unemployment rises, but the trajectory and magnitude of delinquencies and charge-offs at banks— especially during the latest downturn—are much more pronounced.
• Because credit unions appear to be about 75 percent as sensitive to macroeconomic shocks as banks, regulators should consider imposing lower capital requirements to account for the lower risk.
• More open charters do not seem to have made credit unions more risky. Despite gradual moves away from closed charters following the passage of the Membership Access Act, credit unions in general seem to have retained conservative portfolio strategies.

For the complete report, as well as other informative publications, please visit the official Filene Research Institute website. Members will be able to log in using their account information while non-members will have the option of registering an account with the website.