Journal Article

Wages and risk-taking in occupational credit unions: theory and evidence

Abstract: Most occupational credit unions serve (in part) as a means for corporate sponsors to deliver tax-favored benefits to their employees. Credit union managers administer this transfer of benefits, but their performance is difficult to measure, particularly in larger credit unions. In this article, William R. Emmons and Frank A. Schmid develop a model of efficiency wages and optimal risk-taking and then provide empirical evidence from a large sample of occupational credit unions. Higher wage expenses are found in larger credit unions. In addition, the authors find a negative relationship between credit union size and risk-taking. They also find that local deposit-market concentration is a significant factor in explaining wage costs and risk-taking in occupational credit unions.

Keywords: Credit unions; Wages;

Bibliographic Information

Provider: Federal Reserve Bank of St. Louis

Part of Series: Review

Publication Date: 1999

Issue: Mar

Pages: 13-32

Order Number: 2