Income Determinants of Low Income Credit Unions

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Time series and cross sectional models were used to analyze the factors influencing net income to asset ratios of low income credit unions (LICUs), using OLS, and Parks and Da Silva methods. Variables representing loans (except mortgage loans) delinquency rate and paid management positively influenced the income to asset ratios, but investments negatively influenced the income to asset ratios. Loans to asset ratio and loans to investment ratio are substitutes. Low income credit unions benefit more from loan disbursements than from investments in spite of the associated risks. The Parks method was overall more efficient than the other methods in terms of significance of variables and explanatory power.

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