Economic Environment And Credit Unions Flashcards
What is the wealth effect?
If you own an asset and value goes up you increase the wealth effect.
When the economy WEAKENS, what happens to the loan and savings growth of our credit unions?
Savings growth increases because people are saving what they can to get through the hard time.
Loan growth decreases because people don’t want to borrow.
What happens to growth (loan and savings) when the economy STRENGTHENS?
Loan growth increases while savings growth decreases.
What is positive yield curve and how does it effect credit unions net income?
Long term rates are higher than short term rates usually means higher income.
A steeper yield curve means?
More positive income on bottom line
How well has consumer confidence recovered since the Great Recession?
People are still not convinced that we have fully recovered from the recession.
What is the effect of ROA (Return on Assets) on a credit unions net worth ratio?
Income increases = Net worth increases
Income decreases = Net worth decreases
What are the effects of asset growth on a credit unions net income ratio?
Net worth decreases with asset growth, Net worth increases with decline in assets.
How should credit unions respond to the impossibility of predicting interest rates?
We can never predict interest rates, and we should do all that we can with our rates now.
Review the last 10 years as far as savings, loans, delinquency, net charge off and loan to share ratio
Loan growth is higher than 10 years ago, dropped during recession.
Savings growth increased since 2006
Delinquency was higher during the recession and now is flattening out
Net charge offs higher 08-12, slightly higher than 06 due to recession.
