The Impact of a Financial Institution's Age on its Financial Profile and Operating Characteristics: The Evidence from the Credit Union Industry

Selected variables are examined to determine if a different financial profile and operating characteristics exist among credit unions depending on the number of years they have been in operation. Credit unions with more years of experience are expected to: 1. be more saver-oriented, 2. incur higher salaries, 3. get by with lower operating expense, 4. operate with larger capital and reserve positions, and 5. accumulate higher delinquency rates as compared to younger credit unions. Descriptive statistics representing financial and operating characteristics as of 1984 were computed for all credit unions. Next, a paired sample was selected to represent different age categories of credit unions, holding constant their size, type of charter, and nature of parent company business. The analysis provided substantial support for the hypothesized relationships. Results clearly indicate that older credit unions, as compared to their younger counterparts, display different financial profiles and operating characteristics.