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<p>Previous studies have documented the role of credit unions in disciplining bank loan rates in local markets. But there has been no such examination in recent years of the role of credit union competition in driving bank deposit rates. Using a sample of quarterly bank rates on a variety of deposit products between 2017 and 2023, we study the degree to which local market structure impacts these rates, in the increasingly national online banking environment. We find statistical evidence suggesting that – <i>until the surge of deposits and increasing necessity of online banking during the COVID-19 pandemic</i> -- MSA-level bank deposit rates rose as the share of deposits held by credit unions increased, suggesting a competitive influence, as well as a local market for deposits. However, starting in mid-2020, this impact disappears, and we may now find ourselves in a national market for deposits, in which local market structure no longer matters.</p>

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Local Credit Union Competition and Bank Deposit Rates: The Role of Covid-19

  • 期刊论文

  • 发表日期：

    2025年11月24日

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  • Robert M. Feinberg

摘要

Previous studies have documented the role of credit unions in disciplining bank loan rates in local markets. But there has been no such examination in recent years of the role of credit union competition in driving bank deposit rates. Using a sample of quarterly bank rates on a variety of deposit products between 2017 and 2023, we study the degree to which local market structure impacts these rates, in the increasingly national online banking environment. We find statistical evidence suggesting that – until the surge of deposits and increasing necessity of online banking during the COVID-19 pandemic -- MSA-level bank deposit rates rose as the share of deposits held by credit unions increased, suggesting a competitive influence, as well as a local market for deposits. However, starting in mid-2020, this impact disappears, and we may now find ourselves in a national market for deposits, in which local market structure no longer matters.