Date of Award

12-2025

Document Type

Dissertation

Degree Name

Doctor of Business Administration (DBA)

Degree Discipline

Business Administration

Abstract

Credit unions are essential to financial inclusion, particularly in underserved communities; however, they face increasing instability, closures, and consolidations. Traditional corporate bankruptcy models, such as the Altman Z-Score, were designed for profit-driven firms and do not adequately account for the nonprofit, member-owned structure of credit unions. As a result, they overlook both the financial and governance dynamics that shape credit union performance. This dissertation addressed that gap by examining the financial indicators that are most useful for identifying early signs of distress, while interpreting those indicators through the lens of Agency Theory.

Drawing on longitudinal data from the National Credit Union Administration (NCUA) from 2013 to 2024, this study analyzed both financial and governance-related indicators, including capital adequacy, asset quality, liquidity, lending practices, earnings, and operational efficiency. Statistical procedures, such as multicollinearity testing, logistic regression, and discriminant analysis, are applied to isolate the most reliable measures.

The findings highlight ratios such as the loan-to-share ratio, short-term shares ratio, average loan size, and operational expense ratios as significant indicators of financial distress. Importantly, these measures are not only financial markers but also reflect agency-related governance issues, such as weak cost control, risk-prone lending, or excessive managerial conservatism. These measures are useful for both managers to evaluate the financial health of their credit unions and for current and prospective members to make informed decisions about their future actions with the credit unions.

This research contributes to the limited literature on credit union distress in several ways. It demonstrates how financial indicators can serve as early warning signs when interpreted in conjunction with Agency Theory. It also provides practical insights for regulators and managers seeking to enhance oversight and safeguard community-based financial institutions, which are crucial to financial inclusion.

Committee Chair/Advisor

Anish Menon

Committee Member

Erik Kitenge

Committee Member

Elvis Ndembe

Publisher

Prairie View A&M University

Rights

© 2021 Prairie View A & M University

Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

Date of Digitization

11/18/2025

Contributing Institution

J. B . Coleman Library

City of Publication

Prairie View

MIME Type

Application/PDF

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