Who consumes the credit union subsidies?

John Goddard, Donal G. McKillop, John O.S. Wilson*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

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Credit unions in the United States (US) are exempt (benefit from subsidies) from federal corporate income taxes, which are traditionally justified by their non-profit cooperative status and mission of meeting the financial needs of individuals of modest means. In recent years, the efficacy and fairness of these subsidies has been debated extensively as the traditional demarcation between banks and credit unions and their respective customer bases have blurred. To investigate how credit unions allocate subsidies to various stakeholders, we estimate a structural profit model for matched pairs of credit unions and commercial banks. We find that credit unions use most (approximately 90%) of their tax exemption for the benefit of their membership via above-market deposit interest rates.
Original languageEnglish
Article number101176
JournalJournal of Financial Stability
Early online date2 Sept 2023
Publication statusPublished - Dec 2023


  • Commercial banks
  • Credit unions
  • Profit inefficiency
  • Tax exempt status


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