FINTECHNEXT Speaker Series (Dr. Donal McKillop, Queen’s University Belfast, Friday, 15th March 2021): Who Consumes the Credit Union Tax Subsidy?

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FINTECHNEXT Speaker Series 

 Professor Donal McKillop
Queen’s Management School, Queen’s University Belfast 

Friday, 5th March 2021
2pm – 3:30pm (GMT)

Who Consumes the Credit Union Tax Subsidy?

Abstract:Credit unions compete directly with commercial banks but unlike banks do not pay income taxes; this tax exemption is meant to subsidize the provision of financial services to credit union members. We investigate the incidence of this tax subsidy using a structural profit model for 956 matched pairs of US credit unions and commercial banks from 2005 through 2017. Valuing inputs and outputs at market prices, credit unions are substantially more profit inefficient than banks, and nearly half of this inefficiency gap is associated with activities that are unrelated to the purpose of the tax exemption. Valuing inputs and outputs at the prices that credit unions actually pay and charge, we estimate that 95% of the tax subsidy is simply passed through from taxpayers to credit union depositors in the form of above-market interest rates. 


Speaker Profile:Donal McKillop is a professor of financial services at Queen’s Management School, Queen’s University Belfast. His research interests include, governance, risk management and merger and acquisition behaviour in cooperative financial institutions. Donal is currently Director of Centre for Not-for-profit and Public-sector Research at Queen’s and the Chairperson of Credit Union CEO Forum, Ireland. For more information, please see:

This session will be delivered via MS Teams. All welcome.

RSVP to Jie Ie Baik (, FINTECHNEXT Project Manager, by Friday, 26 February.  

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