Abstract
In the U.S., credit union lending grew by 15 percentage points more relative to commercial bank lending after the Great Recession. Comparing institutions that faced similar borrowers within narrowly-defined local credit markets and similar crisis exposures shows the effect is supply-driven. Balance sheet mechanisms, loan pricing, informational advantages, tax benefits, and regulation do not explain results. Rather, higher lending was sustained by lower profit margins. Results suggest member-oriented firm objectives that prioritize the provision of financial services led the $1.4 trillion dollar credit union industry to lend more relative to profit-maximizing banks.
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