The influence of credit union and savings and loan competition on bank deposit rates in Idaho and Montana

This study examines the effect of S & L and credit union competition on bank behavior in Idaho and Montana. A structure-performance OLS model is used to estimate bank interest rates on certain deposits. Two key independent variables are local market share of credit unions and S & L deposits. Overall, previous studies found little evidence that thrift competition affects bank performance. We found some evidence that thrift competition, especially from credit unions, results in higher interest rates for bank CDs. These results have policy implications as banking groups currently seek to restrict credit union competition.