Work

Deposit insurance and credit union earnings opacity

Year: 2024

Type: article

Abstract: This study examines the impact of deposit insurance coverage on credit union earnings opacity. For identification, we employ the provisions outlined in Section 136 of the Emergency Economic Stabilization Act, which raised the upper limit of deposit insurance coverage from $100,000 to $250,000. Using variation in insured deposits brought about by the differential impact of the change to deposit insurance arrangements and a difference-in-differences approach, we find that credit unions experiencing a substantial rise in insured deposits tend to exercise more discretion over loan loss provisions, leading to an increase in earnings opacity. This is most evident for small and medium sized credit unions.

Source: The British Accounting Review

DOI: 10.1016/j.bar.2024.101486

Authors: Lemonia M. Rempoutsika, Dimitris K. Chronopoulos, Linh Nguyen, John O.S. Wilson

Institutions: The Open University, University of St Andrews

Language: English

Topic: Auditing, Earnings Management, Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $3,180

Funder: Université de Limoges