Monday, December 17, 2018

Graphs Look at Relationship Between Membership Growth and Deposit and Loan Growth

Looking at state level data, membership growth at credit unions is partially explained deposit and loan growth at credit unions.

The analysis uses state level data from the National Credit Union Administration for the 3rd quarter of 2018. Variables included in the analysis are median year-over-year membership growth rate, median year-over-year deposit growth rate, and median year-over-year loan growth rate.

Membership growth is treated as the independent variable and the dependent variables are deposit growth and loan growth.

The first graph looks at state level data regarding membership growth and deposit growth. There is a positive relationship between membership growth and deposit growth. The R-squared (goodness of fit) was almost 30 percent.

R-squared values range from 0 to 100 percent. A higher R-squared value means that the independent variable is doing a better job in explaining variances in the dependent variable.

The second graph looks at the relationship between loan growth and membership growth by state. Once again, there is a positive relationship between these variables and the R-squared was nearly 29 percent.


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