The purpose of this study is to determine the extent to which variation in FOM policies across chartering authorities is correlated with measures of effects on consumers and on banks. The results suggest that more liberal FOM policies benefit consumers without diminishing the ability of banks to provide competing services.
Credit unions have a choice of a state or federal charter. The chartering authorities authorize what groups of people each credit union can serve, and this set of groups is known as its “field of membership” (FOM). Policy on FOM is derived from statute, regulations, and the practices of a chartering authority. More liberal FOM policies make consumers’ access to credit union services easier, and more restrictive FOM make access more difficult. FOM policies have potential effects on both consumers and other financial institutions because greater access to credit unions services allows more competition. The purpose of this study is to determine the extent to which variation in FOM policies across chartering authorities is correlated with measures of effects on consumers and on banks. The results suggest that more liberal FOM policies benefit consumers without diminishing the ability of banks to provide competing services.
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