Date of Graduation


Document Type


Degree Name

Doctor of Philosophy in Business Administration (PhD)

Degree Level





Gene C. Lynch

Committee Member

Doris M. Cook


Credit unions, evaluation, current operations, free enterprise economy


The general purpose of this study was to evaluate the operation and problems of credit unions in the United States. More specifically, the study attempted to evaluate the contributions of credit unions, to reveal their major problems, to evaluate their competitive position among financial institutions, and to evaluate the influence of current and proposed credit union legislation. To accomplish the stated purposes, the credit union industry was surveyed at various levels. A questionnaire was sent to all credit union leagues in the United States. Another questionnaire was sent to selected credit unions in the fifth district of the Credit Union National Association. A third questionnaire was sent to all potential members of the UARK Federal Credit Union at the University of Arkansas. The three surveys provided information about all levels of the credit union industry. Additional primary data were gathered through interviews and letters. Ah extensive survey of secondary data was used to support primary data. From the study it was possible to conclude that the competitive position of credit unions for personal savings in the 1970’s will probably be good. Their inflow of savings was relatively stable in the past, especially in the tight money period of 1969-1970. Preliminary reports also show that the new share insurance program will contribute to their competitive position. Credit unions continue to increase their share of the consumer instalment credit market, and there is no reason why they should not continue to do so. Credit cards, check credit and other point-of-purchase credit devices do, however, pose a challenge to credit unions. Also, credit unions now have a much higher percentage of auto paper in their portfolios than they did fifteen years ago. Finance companies have indicated that auto loans are less profitable than other type consumer instalment loans. The league directors and credit union managers surveyed in this study felt that credit unions will face stronger competition for savings and consumer credit in the 1970’s than in the 1960’s. Commercial banks and savings and loan associations were considered their two strongest competitors in the market for savings. Banks and retailers were considered their strongest competitors in the market for consumer instalment credit. Banks were considered the strongest overall competitor. Credit union leaders have developed an ambitious legislative program for the 1970's. The program is designed to give credit unions freedom to offer more services. Expansion of the common bond concept is a major legislative objective. The idea is to expand credit union services and to make them available to more people. The industry is not, however, in complete agreement on the legislative program. Some leaders fear an increase in freedom will subject credit unions to adverse influences such as loss of the original credit union spirit and present tax privileges. Credit unions are confronted with a variety of problems. At the league level, there was a great deal of concern about the problem of applying new technology to the operation of credit unions. This concern was not shared by the credit union managers surveyed. The lack of qualified leaders was considered a problem by leaders at both the league and credit union levels. Individual credit unions are more concerned about increased expenses and loan delinquencies than are league and national leaders. Rising expenses have not yet created serious problems for any but the smallest credit unions. If inflation continues, the margin between income and expenses will decline in the 1970’s. To help prevent this, credit unions will be forced to do more cost analysis. Small credit unions are being put under more pressure to grow or liquidate. Rising expenses and the need to qualify for share insurance are major sources of this pressure. The net result will probably be a reduction in the number of small and newly organized credit unions.