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The impact of internet-based services on credit unions: a propensity score matching approach

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Abstract

Credit unions focus their profit management on providing benefits to their members and augmenting their institutional well-being through capital accumulation. In this study, we investigate the changes in benefits to borrowing and saving members around the adoptions of transactional websites by credit unions for the period of 2000–2009. Using the propensity score matching method, we show that credit union adopters offered borrowing members a better interest rate than non-adopters immediately after the recession of 2001–2002 and a similar rate when economy rebounded. Our results indicate that transactional websites offer credit union members more convenient services with no negative impact on the interest rate on deposits. The results are robust to different definitions of internet-based services non-adopters and different models used to estimate adoption probabilities.

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Notes

  1. Several studies have employed the approach to seasoned equity offerings (Li and Zhao 2006), corporate diversification (Villalonga 2004), spin-offs (Ahn and Walker 2007), and loan rates and collateral decisions (Gottesman and Roberts 2007). More recently, the method has been used for the analysis of venture capital investments (Hellmann et al. 2008), the effects of derivatives listing on market dynamics (Chau et al. 2008), securitization (Sarkisyan et al. 2009), and mergers and acquisitions (Behr and Heid 2011).

  2. Similar to Li and Zhao (2006), the functional forms of the propensity score models differ from year to year, although the set of ex ante variables is the same for all years.

  3. Results are available from the authors upon request.

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Acknowledgments

The authors would like to thank Cheng-Few Lee (the editor) and the anonymous referees for helpful comments. We are also grateful to Allen Berger, Robert Kunkel, Donal McKillop, John Thornton, Michael Tsiappoutas, John Wilson, and participants at the 2012 Multinational Finance Society, Krakow, Poland and the 2012 Financial Management Association, Atlanta, Georgia, for valuable comments and suggestions. Financial support provided by the Illinois Wesleyan University, ASD Grant, is acknowledged. All remaining errors are our own.

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Authors and Affiliations

  1. Department of Business and Economics, Illinois Wesleyan University, Bloomington, IL, 61702, USA

    Elisabeta Pana & David Willis

  2. Goizueta Business School, Emory University, Atlanta, GA, 30322, USA

    Sascha Vitzthum

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  1. Elisabeta Pana
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  2. Sascha Vitzthum
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Correspondence to Elisabeta Pana.

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Pana, E., Vitzthum, S. & Willis, D. The impact of internet-based services on credit unions: a propensity score matching approach. Rev Quant Finan Acc 44, 329–352 (2015). https://doi.org/10.1007/s11156-013-0408-2

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  • DOI: https://doi.org/10.1007/s11156-013-0408-2

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