Credit Union Member Benefits: Does Local Religiosity Matter?

Abstract We examine the impact of religiosity on credit union member benefits and document a positive association between local religiosity and member benefits. Members of credit unions in more religious counties enjoy lower interest rates on loans, higher interest rates on deposits, and consequently lower interest spreads. The effect varies by credit union types, and results suggest a stronger association between religiosity and member benefits for credit unions with a narrower field of membership. Further analysis indicates local religiosity is associated with improved operating performance, lower non-interest expenses, and higher quality earning assets, but increased liquidity risk. The results are robust to various model specifications, subsamples, and economic conditions.