FEDERAL WAY, Wash. (Filed 6/7/13 at 1:05 p.m. CT)--All of the major claims made by critics of credit unions in terms of uneven playing field are unsubstantiated, says an economic analysis released today. What's more, there is "no evidence that state and federal tax policies give credit unions unfair competitive advantages over banks."
"Credit Unions vs. Banks: The Myth of the Uneven Playing Field" is authored by
ECONorthwest's Randall Pozdena, managing director and senior economist, and Michael Wilkerson, senior economist. The report was commissioned by the Northwest Credit Union Association.
The independent economic analysis was commissioned after bank trade associations in Oregon and the U.S. lobbied to eliminate not-for-profit credit unions' tax-exempt status in the state and in Congress.
"In our view," wrote the authors, the difference in organizational forms of credit unions and commercial banks, the asymmetry of powers enjoyed by the respective institutions, and the trends in credit union development are not consistent with the claim that credit unions enjoy unfair competitive advantages."
In the study, they reviewed the theory and historical performance of credit unions, then statistically tested where there is a comparative performance difference based on the adoption of the community common bond membership criterion, or credit unions' exemption from corporate income taxation.
"All the major claims made by critics of the credit union industry are unsubstantiated," said the report. Contrary to the claims of banks, the study concluded:
For the full report, use the link.