This paper examines the relationship between deposit insurance and risk-taking behavior within the credit union industry. Time series tests employing industry average financial ratios for federal and state credit unions did not support the increased risk-taking hypothesis. Although federal credit union capital declined immediately following the adoption of deposit insurance, this was most likely the result of reduced capital requirements, not deposit insurance. Liquidity and loan delinquency ratios had a negative time trend coefficient, implying a decline in risk-taking behavior during the post-insurance period. Cross-sectional test results employing Iowa state-chartered credit union data indicated that insured credit unions were better capitalized and more liquid than their uninsured counterparts. Overall there was no evidence that the adoption of deposit insurance increased the risk-taking behavior of credit unions.

This paper presents an empirical test of the major hypothesis of the currently-accepted bidding models in two regions of differing tract value uncertainty. The most significant result is an empirical verification that the more bidders that bid on a particular parcel in the face of great uncertainty, the lower the bid levels of individual firms that participate given all else is constant. No such relationship was observed, however, in the sale where there was previous bidding experience and prior ownership of closely related tracks. Prior models have not been able to identify the inverse relationship because of a bias that occurs when only positive bids are employed in these models and the use of data where previous experience reduces uncertainty. In the analysis of the competitive bidding situation, we use a two-stage procedure which adjusts for this “selection bias” by allowing for the incorporation of information from the dichotomous bid/no-bid decision in the modeling of bid level.