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Capital adequacy and capital regulation of Us credit unions

Donald McKillop, John O.S. Wilson, John Goddard
July-August 2009 - n°7/8
Keywords: capital adequacy, credit unions, capital regulation
Jel codes: G21, G28, G32

The article examines the determinants of capital-assets ratios for credit unions in the United States, before and after the implementation of current framework for capital adequacy regulation in the year 2000. Credit unions appear to hold capital in excess of what is required by current capital regulation. The fact that credit unions take longer than banks to accumulate net worth might have encouraged a more prudent, pro-cyclical approach to capital provisioning. In general they entered the crisis in a stronger position to absorb unforeseen losses than many banks.