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A dynamic theory of the credit union

Geoffrey Rubin (), George Overstreet (), Peter Beling () and Kanshukan Rajaratnam

Annals of Operations Research, 2013, vol. 205, issue 1, 29-53

Abstract: A topic of recent interest in the retail financial sector has been the growth of credit unions or “pure cooperatives”. Past credit union researchers built mathematical models of credit union operations. These models identified important operating characteristics but were modeled under assumptions of static operating environments. The model presented in this paper departs from the traditional static models and examines dynamic operation for a United States credit union. Its inter-temporal structure clarifies a number of issues—such as optimal equity retention and inter-temporal rate policy—not addressed by earlier studies. Given initial conditions, the model specifies equity retention and inter-temporal deposit and loan rate policies until an equilibrium state is reached. Copyright Springer Science+Business Media New York 2013

Keywords: Credit union; Optimal control; Capital management; Financial services (search for similar items in EconPapers)
Date: 2013
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DOI: 10.1007/s10479-012-1246-7

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Handle: RePEc:spr:annopr:v:205:y:2013:i:1:p:29-53:10.1007/s10479-012-1246-7