Who could we blame? The impact of strategic orientations on the failure of financial institutions

X.V. Vo, T.Q. Le, T.L.A. Nguyen, H.N. Luu

    Research output: Contribution to journalArticlepeer-review

    Abstract

    We evaluate the impact of strategic orientation on the failure probability of financial institutions. Using the US credit union industry as the empirical setting, we find that credit unions which exhibit preferential treatment to borrowers are more likely to fail, whereas those who set operational strategies towards balancing the benefits between savers and borrowers experience a lower failure probability. The impacts appear to be more pronounced in small credit unions and in credit unions which have a lower operating experience. We also find that borrower-oriented credit unions generate lower interest margins while neutral behavior credit unions generate higher margins.
    Original languageEnglish
    JournalReview of Pacific Basin Financial Markets and Policies
    Volume24
    Issue number2
    DOIs
    Publication statusE-pub ahead of print - 21 Jun 2021

    Keywords

    • Credit unions
    • Failure
    • Strategic orientation

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