Who Could We Blame? The Impact of Strategic Orientations on the Failure of Financial Institutions

Xuan Vinh Vo, Tuan Quoc Le, Thi Lam Anh Nguyen and Hiep Ngoc Luu
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Tuan Quoc Le: National Yang Ming Chiao Tung University, Taiwan3Centre for Applied Economics and Business Research, Hanoi, Vietnam
Thi Lam Anh Nguyen: Banking Academy of Vietnam, Hanoi, Vietnam3Centre for Applied Economics and Business Research, Hanoi, Vietnam
Hiep Ngoc Luu: University of St Andrews, St Andrews, UK3Centre for Applied Economics and Business Research, Hanoi, Vietnam

Review of Pacific Basin Financial Markets and Policies (RPBFMP), 2021, vol. 24, issue 02, 1-27

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.

Keywords: Strategic orientation; credit unions; failure (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1142/S0219091521500119

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