Study Shows Little Consumer Benefit In CUConversions

Register now

MADISON, Wis. - (02/22/06) -- A new study of credit unionconversions to mutual savings banks show there is no evidence todemonstrate consumers benefit in the way of savings and loan rates.The study of 30 converted credit unions shows those institutions onaverage pay lower savings rates and charge higher loan rates thancredit unions, according to Dr. Russ Kashian, co-author, aprofessor of economics, University of Wisconsin-Whitewater. "Ifyou're a borrower, you're going to pay higher rates, and if you'rea saver you're going to receive lower returns," said Kashian. Butthe study fails to show what the effect the conversions had onthose institutions and how much of the differences were because ofthe taxes paid after the conversions, Kashian said. "The effects ofthe conversion are hard to gauge," Kashian told The Credit UnionJournal. The study was commissioned by the American Association ofCU Leagues.

For reprint and licensing requests for this article, click here.