The More the Merrier?

The Eect of Board Size on Performance

Filipe Lacerda
Booth School of Business
University of Chicago
May 2014
Filipe Lacerda (Chicago Booth) Board Size Dissertation Defense 1 / 19
Dissertation Defense
To recap
. use US credit unions as an empirical laboratory
. dierences in regulation generate cleaner variation in board size
. larger boards improve performance through monitoring
Issues raised by proposal
. Credit Unions 101 - what are they? boards of directors? regulation?
. Objective function and outcome variables
. Additional results
. External validity
Filipe Lacerda (Chicago Booth) Board Size Dissertation Defense 2 / 19
Dissertation Defense
To recap
. use US credit unions as an empirical laboratory
. dierences in regulation generate cleaner variation in board size
. larger boards improve performance through monitoring
Issues raised by proposal
. Credit Unions 101 - what are they? boards of directors? regulation?
. Objective function and outcome variables
. Additional results
. External validity
Filipe Lacerda (Chicago Booth) Board Size Dissertation Defense 2 / 19
What are credit unions?
Credit unions are cooperative banks
. take deposits from and lend to same people (member-owners)
. examples: universities, hospitals, churches
Balance sheets
. household nance - residential mortgages, auto loans, credit cards
. funded with deposits and retained earnings
Important segment of intermediation sector
. $1 trillion in US alone
Filipe Lacerda (Chicago Booth) Board Size Dissertation Defense 3 / 19
Credit union governance
Board of directors supervises management
. directors must be members
. unpaid directors
. mandatory monthly meetings
CEO plays important role in director selection
Dual-charter supervisory system
. State and federal regulators in same state
. Federal parity clauses approximate two systems
Filipe Lacerda (Chicago Booth) Board Size Dissertation Defense 4 / 19
Credit union governance
Board of directors supervises management
. directors must be members
. unpaid directors
. mandatory monthly meetings
CEO plays important role in director selection
Dual-charter supervisory system
. State and federal regulators in same state
. Federal parity clauses approximate two systems
Filipe Lacerda (Chicago Booth) Board Size Dissertation Defense 4 / 19
Legal Minimum (as of 2011)
State Federal
Iowa and Massachusetts 9 5
Illinois and Oklahoma 7 5
Other States 5 5
Filipe Lacerda (Chicago Booth) Board Size Dissertation Defense 5 / 19
Legal Minimum (as of 2011)
State Federal
Iowa and Massachusetts 9 5
Illinois and Oklahoma 7 5
Other States 5 5
Filipe Lacerda (Chicago Booth) Board Size Dissertation Defense 5 / 19
Legal Minimum (as of 2011)
State Federal
Iowa and Massachusetts 9 5
Illinois and Oklahoma 7 5
Other States 5 5
Filipe Lacerda (Chicago Booth) Board Size Dissertation Defense 5 / 19
Distribution Of Board Size
Observable Dierences
Filipe Lacerda (Chicago Booth) Board Size Dissertation Defense 6 / 19
Distribution Of Board Size
Observable Dierences
Filipe Lacerda (Chicago Booth) Board Size Dissertation Defense 6 / 19
Distribution Of Board Size
Observable Dierences
Filipe Lacerda (Chicago Booth) Board Size Dissertation Defense 6 / 19
Measuring Performance
What is credit union objective?
. economic surplus from intermediation between saving and borrowing
members, net of costs Banerjee et al. (1994)
Intermediation Intensity
. Total loans per member / employee / dollar in costs
Loan Characteristics
. Loan size / interest rate / delinquency rates
Member Deposits
. Deposit size / maturity and fraction of uninsured deposits
Filipe Lacerda (Chicago Booth) Board Size Dissertation Defense 7 / 19
Measuring Performance
What is credit union objective?
. economic surplus from intermediation between saving and borrowing
members, net of costs Banerjee et al. (1994)
Intermediation Intensity
. Total loans per member / employee / dollar in costs
Loan Characteristics
. Loan size / interest rate / delinquency rates
Member Deposits
. Deposit size / maturity and fraction of uninsured deposits
Filipe Lacerda (Chicago Booth) Board Size Dissertation Defense 7 / 19
Cross-Sectional Regressions
State Federal
Iowa and Massachusetts 9 5
Illinois and Oklahoma 7 5
Other States 5 5
Equations First Stage Results
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Intermediation Intensity
(1) (2) (3) (4) (5) (6)
Variables Loan amount per member ($) Loan amount per employee ($ millions) Total loans to total costs
Board Size 215.1*** 535.9*** 0.091*** 0.146*** 467.9*** 164.6
(34.9) (102.7) (0.008) (0.044) (48.2) (361.2)
Observations 6,615 6,615 6,615 6,615 6,614 6,614
Mean (Outcome Variable) 3,853 3,853 1.370 1.370 15,883 15,883
Specication OLS IV OLS IV OLS IV
Controls? ZIP code ZIP code ZIP code ZIP code ZIP code ZIP code
Fixed eects? State State State State State State
Adjusted R-squared 0.062 0.032 0.091 0.081 0.049 0.044
Threshold Results Loan Characteristics Member Deposits
Filipe Lacerda (Chicago Booth) Board Size Dissertation Defense 9 / 19
Identication concerns
Basic specication raises two concerns
. Better credit unions select charter with higher minimum
. Regulator setting higher minimum dierent in other ways
Exploit multiple sources of variation to tackle both
Find similar results
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Charter Selection: Conversions
State Federal
Iowa and Massachusetts
9
5
Illinois and Oklahoma 7 5
Other States 5 5
Equations
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Charter Selection: Conversions
State Federal
Iowa and Massachusetts
9
5
Illinois and Oklahoma 7 5
Other States 5 5
Equations
Filipe Lacerda (Chicago Booth) Board Size Dissertation Defense 11 / 19
Charter Selection: Conversions
State Federal
Iowa and Massachusetts
9
5
Illinois and Oklahoma 7 5
Other States
5
5
Equations
Filipe Lacerda (Chicago Booth) Board Size Dissertation Defense 11 / 19
Intermediation Intensity
(1) (2) (3) (4) (5) (6)
Variables Loan amount per member ($) Loan amount per employee ($ millions) Total loans to total costs
Legal Minimum 618.9*** 614.1*** 0.100*** 0.098*** 777.9** 749.6**
(215.5) (217.5) (0.033) (0.033) (345.5) (338.6)
Observations 22,733 203,283 22,733 203,283 22,733 203,267
Mean (Outcome Variable) 2,884 2,884 1.050 1.050 20,478 20,478
Specication DD DDD DD DDD DD DDD
Adjusted R-squared 0.002 0.000 0.092 0.075 0.007 0.009
Loan Characteristics Member Deposits
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Charter Selection: Discontinuity Year Formation
State Federal
Iowa and Massachusetts
Pre-1934 Post-1934
Illinois and Oklahoma
Other States
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Discontinuity around 1934
Probability of State Charter by Year of Formation
Table
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Discontinuity around 1934
Average Board Size by Year of Formation
Table
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Intermediation Intensity
(1) (2) (3) (4) (5) (6)
Variables Loan amount per member ($) Loan amount per employee ($ millions) Total loans to total costs
Board Size 454.1*** 1,479.7** 0.122** 0.434** 33.5 1,004.3
(118.7) (656.6) (0.050) (0.189) (399.1) (645.9)
Observations 5,659 5,659 5,659 5,659 5,658 5,658
Mean (Outcome Variable) 3,853 3,853 1.370 1.370 15,883 15,883
Instrument Legal Min Pre-1934 Dum Legal Min Pre-1934 Dum Legal Min Pre-1934 Dum
Controls? ZIP code + age ZIP code + age ZIP code + age ZIP code + age ZIP code + age ZIP code + age
Fixed eects? State State State State State State
Adjusted R-squared 0.045 -0.398 0.092 -0.304 0.034 0.028
Loan Characteristics Member Deposits
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Regulator Dierences: Law Change 1995
State Federal
Iowa and Massachusetts 9 5
Illinois and Oklahoma 7 5
Other States 5 5
Equations
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Regulator Dierences: Law Change 1995
State Federal
Iowa / Massachusetts 9 / 11 5
Illinois and Oklahoma 7 5
Other States 5 5
Equations
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Intermediation Intensity
(1) (2) (3) (4) (5) (6)
Variables Loan amount per member ($) Loan amount per employee ($ millions) Total loans to total costs
Legal Minimum 1,134.7*** 1,672.9*** 0.030** 0.146 449.0 1,710.0**
(50.5) (431.9) (0.013) (0.097) (880.4) (578.8)
Observations 18,287 25,133 17,968 23,515 18,286 25,123
Mean (Outcome Variable) 2,884 2,884 1.050 1.050 20,478 20,478
Adjusted R-squared 0.002 0.004 0.137 0.116 0.016 0.012
Sample MA + Similar MA + Neighbors MA + Similar MA + Neighbors MA + Similar MA + Neighbors
Loan Characteristics Member Deposits Additional TS Evidence
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Why do we care?
Credit unions are large - $1.7 trillion in assets
Cooperative banks
. Similar objectives, balance sheets, governance
. Are very large - $9 trillion in assets in Europe alone
Investor-owned banks?
. Riskier so monitoring more valuable
. But have alternative governance mechanisms - e.g. takeovers
. Results consistent with this literature
Filipe Lacerda (Chicago Booth) Board Size Dissertation Defense 18 / 19
Take-aways
Do board characteristics aect outcomes via monitoring?
Credit unions with larger boards
. Are more ecient
. Oer better loan terms
. Have easier access to member funding
Board structure inuences monitoring
If members are credit-constrained, may aect real outcomes
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Questions
Thank you for coming!
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Data Collection
Call report nancial data from the NCUA for 1991 through 2011
. Use 2011 for cross-sectional evidence
. Use all data later
Board size data is only available for 2012
. Available from NCUA
. Cross-referenced with Guidestar data from IRS 990 forms, websites
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Summary Stats
Variable Mean SD P25 Median P75
Board Size 7.74 2.04 6 8 9
Assets ($million) 130.07 782.54 6.06 19.91 69.75
Loan amount per member ($) 3853 3540 2079 3255 4920
Loan amount per employee ($ millions) 1.37 1.04 0.75 1.22 1.76
Total loans to total costs 15883 8280 10951 14515 18720
Average loan amount ($) 9060 4808 5897 7931 10914
Interest rate on loans (%) 6.97 1.7 5.83 6.58 7.64
Delinquency rate 0.02 0.03 0.01 0.01 0.02
Average deposit amount ($) 4033 1904 2773 3699 4873
Fraction of long-term deposits 0.27 0.18 0.12 0.28 0.39
Fraction of uninsured deposits 0.01 0.03 0 0 0.02
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Intermediation Intensity
(1) (2) (3) (4) (5) (6)
Variables Loan amount per member ($) Loan amount per employee ($ millions) Total loans to total costs
Board Size 1,079.6*** 659.6*** 0.345*** 0.173*** 507.6* 52.1
(147.8) (172.7) (0.046) (0.057) (290.1) (326.4)
Log Assets 800.6*** 0.327*** 868.4***
(44.3) (0.013) (157.6)
Observations 1,095 1,095 1,095 1,095 1,095 1,095
Mean (Outcome Variable) 3,853 3,853 1.370 1.370 15,883 15,883
Sample Constrained Constrained Constrained Constrained Constrained Constrained
Controls? ZIP code ZIP code ZIP code ZIP code ZIP code ZIP code
Fixed eects? State State State State State State
Adjusted R-squared 0.120 0.398 0.068 0.414 0.077 0.106
Cross-sectional results
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Loan Characteristics
(1) (2) (3) (4) (5) (6)
Variables Average loan amount ($) Interest rate on loans (%) Delinquency Rate
Board Size 355.4*** 1,162.6*** -0.143*** -0.093 -0.002*** -0.002***
(51.2) (165.7) (0.009) (0.103) (0.000) (0.000)
Observations 6,615 6,615 6,615 6,615 6,615 6,615
Mean (Outcome Variable) 9,060 9,060 6.97 6.97 0.02 0.02
Specication OLS IV OLS IV OLS IV
Controls? ZIP code ZIP code ZIP code ZIP code ZIP code ZIP code
Fixed eects? State State State State State State
Adjusted R-squared 0.143 0.037 0.125 0.121 0.030 0.030
Threshold Results Cross-sectional Results
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Member Deposits
(1) (2) (3) (4) (5) (6)
Variables Average deposit amount ($) Fraction of long-term deposits Fraction of uninsured deposits
Board Size 127.8*** 274.6*** 0.009*** 0.030*** 0.002*** 0.003***
(12.7) (86.5) (0.001) (0.008) (0.000) (0.001)
Observations 6,800 6,800 6,800 6,800 6,800 6,800
Mean (Outcome Variable) 4,033 4,033 0.27 0.27 0.01 0.01
Specication OLS IV OLS IV OLS IV
Controls? ZIP code ZIP code ZIP code ZIP code ZIP code ZIP code
Fixed eects? State State State State State State
Adjusted R-squared 0.107 0.085 0.080 0.030 0.049 0.042
Threshold Results Cross-sectional Results
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Loan Characteristics
(1) (2) (3) (4) (5) (6)
Variables Average loan amount ($) Interest rate on loans (%) Delinquency Rate
Board Size 1,522.5*** 806.1*** -0.283*** -0.030 -0.002 -0.000
(153.6) (195.8) (0.073) (0.057) (0.001) (0.001)
Log Assets 1,365.8*** -0.483*** -0.004***
(74.3) (0.045) (0.001)
Observations 1,095 1,095 1,095 1,095 1,095 1,095
Mean (Outcome Variable) 9,060 9,060 6.97 6.97 0.02 0.02
Sample Constrained Constrained Constrained Constrained Constrained Constrained
Controls? ZIP code ZIP code ZIP code ZIP code ZIP code ZIP code
Fixed eects? State State State State State State
Adjusted R-squared 0.100 0.322 0.142 0.330 0.002 0.053
Cross-sectional results
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Member Deposits
(1) (2) (3) (4) (5) (6)
Variables Average deposit amount ($) Fraction of long-term deposits Fraction of uninsured deposits
Board Size 313.9*** 76.7* 0.054*** 0.026*** 0.005*** 0.003**
(21.3) (44.7) (0.006) (0.005) (0.001) (0.001)
Log Assets 452.0*** 0.052*** 0.004***
(29.5) (0.003) (0.000)
Observations 1,095 1,095 1,095 1,095 1,095 1,095
Mean (Outcome Variable) 4,033 4,033 0.27 0.27 0.01 0.01
Sample Constrained Constrained Constrained Constrained Constrained Constrained
Controls? ZIP code ZIP code ZIP code ZIP code ZIP code ZIP code
Fixed eects? State State State State State State
Adjusted R-squared 0.065 0.221 0.049 0.228 0.041 0.109
Cross-sectional results
Filipe Lacerda (Chicago Booth) Board Size Dissertation Defense 19 / 19
Loan Characteristics
(1) (2) (3) (4) (5) (6)
Variables Average loan amount ($) Interest rate on loans (%) Delinquency Rate
Board Size 1,100.1*** 1,493.1*** -0.050 -0.154 -0.001** -0.002
(179.7) (438.8) (0.118) (0.101) (0.001) (0.002)
Observations 5,659 5,659 5,659 5,659 5,659 5,659
Mean (Outcome Variable) 9,060 9,060 6.97 6.97 0.02 0.02
Instrument Legal Min Pre-1934 Dum Legal Min Pre-1934 Dum Legal Min Pre-1934 Dum
Controls? ZIP code + age ZIP code + age ZIP code + age ZIP code + age ZIP code + age ZIP code + age
Fixed eects? State State State State State State
Adjusted R-squared 0.057 -0.068 0.109 0.120 0.027 0.02
Discontinuity
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Member Deposits
(1) (2) (3) (4) (5) (6)
Variables Average deposit amount ($) Fraction of long-term deposits Fraction of uninsured deposits
Board Size 184.4* 396.3** 0.032*** 0.037** 0.004*** 0.005**
(95.3) (175.4) (0.006) (0.015) (0.001) (0.002)
Observations 5,659 5,659 5,659 5,659 5,659 5,659
Mean (Outcome Variable) 4,033 4,033 0.27 0.27 0.01 0.01
Instrument Legal Min Pre-1934 Dum Legal Min Pre-1934 Dum Legal Min Pre-1934 Dum
Controls? ZIP code + age ZIP code + age ZIP code + age ZIP code + age ZIP code + age ZIP code + age
Fixed eects? State State State State State State
Adjusted R-squared 0.115 0.038 0.002 -0.025 0.046 0.025
Discontinuity
Filipe Lacerda (Chicago Booth) Board Size Dissertation Defense 19 / 19
Loan Characteristics
(1) (2) (3) (4) (5) (6)
Variables Average loan amount ($) Interest rate on loans (%) Delinquency Rate
Legal Minimum 1,047.9*** 1,035.4*** -0.241*** -0.239*** -0.004*** -0.004***
(265.7) (269.4) (0.076) (0.076) (0.001) (0.001)
Observations 22,733 203,283 22,733 203,283 22,733 203,283
Mean (Outcome Variable) 7,187 7,187 8.95 8.95 0.02 0.02
Specication DD DDD DD DDD DD DDD
Adjusted R-squared 0.000 0.000 0.261 0.014 0.013 0.012
Conversions
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Member Deposits
(1) (2) (3) (4) (5) (6)
Variables Average deposit amount ($) Fraction of long-term deposits Fraction of uninsured deposits
Legal Minimum 274.5* 279.7* 0.033*** 0.034*** 0.005*** 0.005***
(143.9) (146.4) (0.011) (0.011) (0.001) (0.001)
Observations 22,733 203,283 22,733 203,283 22,733 203,283
Mean (Outcome Variable) 3,161 3,161 0.23 0.23 0.02 0.02
Specication DD DDD DD DDD DD DDD
Adjusted R-squared 0.002 0.001 0.069 0.069 0.042 0.077
Conversions
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Loan Characteristics
(1) (2) (3) (4) (5) (6)
Variables Average loan amount ($) Interest rate on loans (%) Delinquency Rate
Legal Minimum 290.5*** 439.1*** -0.090*** -0.070** -0.001* -0.005
(83.8) (101.4) (0.027) (0.026) (0.001) (0.003)
Observations 18,270 25,034 18,270 25,034 18,270 25,034
Mean (Outcome Variable) 7,187 7,187 8.95 8.95 0.02 0.02
Adjusted R-squared 0.329 0.254 0.534 0.448 0.033 0.039
Sample MA + Similar MA + Neighbors MA + Similar MA + Neighbors MA + Similar MA + Neighbors
Law Change
Filipe Lacerda (Chicago Booth) Board Size Dissertation Defense 19 / 19
Member Deposits
(1) (2) (3) (4) (5) (6)
Variables Average deposit amount ($) Fraction of long-term deposits Fraction of uninsured deposits
Legal Minimum 156.4*** 269.7*** 0.007** 0.006 0.007*** 0.007**
(10.8) (52.7) (0.003) (0.009) (0.001) (0.003)
Observations 18,284 25,125 18,284 25,124 18,284 25,125
Mean (Outcome Variable) 3,161 3,161 0.23 0.23 0.02 0.02
Adjusted R-squared 0.247 0.176 0.098 0.126 0.090 0.047
Sample MA + Similar MA + Neighbors MA + Similar MA + Neighbors MA + Similar MA + Neighbors
Law Change
Filipe Lacerda (Chicago Booth) Board Size Dissertation Defense 19 / 19
Loan Characteristics
(1) (2) (3)
Variables Average loan amount ($) Interest rate on loans (%) Delinquency Rate
Board Size 1,136.5*** -0.085 -0.001***
(187.0) (0.083) (0.000)
Board Size x CEO on Board 48.6 -0.063 -0.003
(122.9) (0.094) (0.002)
CEO on Board -387.7 0.760 0.023
(1,118.9) (0.723) (0.014)
Observations 6,605 6,605 6,605
Mean (Outcome Variable) 9,060 6.97 0.02
Controls? ZIP code ZIP code ZIP code
Fixed eects? State State State
Adjusted R-squared 0.042 0.122 0.029
Interactions
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Member Deposits
(1) (2) (3)
Variables Average deposit amount ($) Fraction of long-term deposits Fraction of uninsured deposits
Board Size 230.0*** 0.029*** 0.003***
(62.9) (0.006) (0.001)
Board Size x CEO on Board 123.5 0.012 0.002**
(77.7) (0.011) (0.001)
CEO on Board -939.8 -0.118 -0.012*
(608.7) (0.088) (0.006)
Observations 6,605 6,605 6,605
Mean (Outcome Variable) 4,033 0.27 0.01
Controls? ZIP code ZIP code ZIP code
Fixed eects? State State State
Adjusted R-squared 0.084 0.015 0.043
Interactions
Filipe Lacerda (Chicago Booth) Board Size Dissertation Defense 19 / 19
Additional Law Changes
(1) (2) (3) (4)
Variables Loan amount per member ($) Savings amount per member ($) Loan amount per member ($) (real) Savings amount per member ($) (real)
Legal Minimum 119.4** 233.3** 137.4* 280.2**
(33.1) (43.5) (56.5) (78.3)
Observations 192 192 192 192
Mean (Outcome Variable) 1,650 2,181 3,327 4,267
Adjusted R-squared 0.981 0.985 0.965 0.945
Sample IL, MA, NJ, WA IL, MA, NJ, WA IL, MA, NJ, WA IL, MA, NJ, WA
Massachusetts Law Change
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Observable Dierences
Variable Means In States Where
State Legal Minimum = 5 State Legal Minimum = 7 State Legal Minimum = 9
Variable Fed State Di Fed State Di Fed State Di
Board Size 7.50 7.68 -0.18*** 7.75 8.86 -1.11*** 8.52 10.40 -1.88***
Log ( # Establishments) 5.66 5.59 0.07 5.84 6.04 -0.20 6.09 5.98 0.11
Average Wage ($thousand) 40.36 39.99 0.37 39.97 40.86 -0.89 46.95 39.66 7.29***
Number of Observations 4153 2279 142 297 124 216
Distribution of Board Size
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Regulator Dierences: Fees
(1) (2) (3) (4)
Variables Fees ($) Fees ($) Fees ($) Fees ($)
Legal Minimum 409.9 -180.6
(340.7) (519.6)
State Charter -2,703.5 43.2
(1,723.4) (1,618.7)
Observations 7,240 781 7,240 781
Mean (Outcome Variable) 20,504 16,000 20,504 16,000
Adjusted R-squared 0.706 0.743 0.707 0.743
Sample All States IA/IL/OK/MA All States IA/IL/OK/MA
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Board Size and Monitoring
Why do larger boards improve performance?
Are larger boards more eective when CEO has board seat?
. Seat gives more control over board decision making
Filipe Lacerda (Chicago Booth) Board Size Dissertation Defense 19 / 19
Board Size and Monitoring
Estimate
y
i
=
s
+
1
D
i
+
2
\
BoardSize
i
+
3
\
D
i
BoardSize
i
+
X
X
i
+
i
with D
i
denoting the presence of the manager on the board of
directors.
Where tted values come from estimating
BS
i
=
1s
+
11
D
i
+
12
LM
i
+
13
D
i
LM
i
+
1X
X
i
+
1i
D
i
BS
i
=
2s
+
21
D
i
+
22
LM
i
+
23
D
i
LM
i
+
2X
X
i
+
2i
Filipe Lacerda (Chicago Booth) Board Size Dissertation Defense 19 / 19
Intermediation Intensity
(1) (2) (3)
Variables Loan amount per member ($) Loan amount per employee ($ millions) Total loans to total costs
Board Size 449.0*** 0.110* 23.3
(118.3) (0.059) (462.3)
Board Size x CEO on Board 257.1*** 0.100*** 406.3
(81.6) (0.034) (264.9)
CEO on Board -2,169.9*** -0.853*** -2,868.9
(713.3) (0.295) (2,208.6)
Observations 6,605 6,605 6,604
Mean (Outcome Variable) 3,853 1.370 15,883
Controls? ZIP code ZIP code ZIP code
Fixed eects? State State State
Adjusted R-squared 0.036 0.068 0.041
Loan Characteristics Member Deposits
Filipe Lacerda (Chicago Booth) Board Size Dissertation Defense 19 / 19
Cross-Sectional Regressions
Using 2011 data, estimate
y
i ,sc
=
s
+ BoardSize
i ,sc
+
X
X
i ,sc
+
i ,sc
y
i ,sc
=
s
+
\
BoardSize
i ,sc
+
X
X
i ,sc
+
i ,sc
where
\
BoardSize
i
is instrumented board size from
BoardSize
i ,sc
=
s
+LegalMinimum
i ,sc
+
X
X
i ,sc
+
i ,sc
s = State and c = Charter type
Zip-code level measures of economic conditions
Figure
Filipe Lacerda (Chicago Booth) Board Size Dissertation Defense 19 / 19
First Stage Results
Variables Board size
Legal Minimum 0.71***
(0.073)
Observations 6,802
Adjusted R-squared 0.115
Kleibergen-Paap F-stat 94.1
State xed eects? Yes
Controls? Yes
Figure
Filipe Lacerda (Chicago Booth) Board Size Dissertation Defense 19 / 19
Charter Selection: Conversions
With states where State and Fed minimum diers, I estimate:
y
i ,gt
=
g
+
t
+LegalMin
i ,gt
+
i ,gt
. g is group, e.g. Convert from Fed to State
. t is year
Adding states where State and Fed minimum are equal, I estimate:
y
i ,gmt
=
gm
+
tm
+
gm
+LegalMin
i ,gmt
+
i ,gmt
. m is state type, e.g. State and Fed minimum dier
Figure
Filipe Lacerda (Chicago Booth) Board Size Dissertation Defense 19 / 19
First Stage Results
(1) (2)
Variables Board Size Board Size
Pre-1934 Dummy 0.828***
(0.144)
Legal Minimum 0.700***
(0.037)
Kleibergen-Paap F-statistic 31.9 288.9
Observations 5,662 5,662
Adjusted R-squared 0.108 0.121
Figure
Filipe Lacerda (Chicago Booth) Board Size Dissertation Defense 19 / 19
Regulator Dierences: Law Change 1995
Using data from 1991 to 2011 I estimate:
y
i ,sct
=
sc
+
ts
+
ct
+LegalMin
i ,sct
+
i ,sct
Two sets of control states
. states contiguous to MA
. states with similar ratio of state credit unions
Figure
Filipe Lacerda (Chicago Booth) Board Size Dissertation Defense 19 / 19