Credit union business models

Abstract

Credit union decisions on how funds are raised and invested and what services to provide are guided by their business models and should be reflected by credit union financial statements. We use cluster analysis to group credit unions using common size financial statement variables such that the financial statements are similar within credit union groups and distinct across groups. This allows the assignment of credit unions to groups by knowing their essential elements but without predefining the groups. In this paper, we present six credit union strategic groups differentiated from each other by their asset-liability management choices and the services they provide members. Identifying the various credit union groups provides a clearer picture of their business models and the economic roles that different credit unions play.