Raymond H. Lopez and Surendra K. Kaushik, professors of finance at Pace University's Lubin School of Business, find that banks are not at a competitive disadvantage despite their tax-paying status. Credit unions, on the other hand, maintain a non-taxable status and have a limited client base, and perform on par with behemoth banks. Some of these findings are explained by the new competitive realities of deregulated financial markets. Looking at both loan and securities portfolios of the two industries, Lopez and Kaushik conclude that the large size of the commercial banking industry does not necessarily generate higher profitability. Demonstrating a significant comeback from the 1980's, commercial banking has visibly recovered from some of its crises, and is performing well across the board.
Data show a narrowing of spreads between the two industries in most areas of financial performance.
Although credit unions operate under more restrictive guidelines than commercial banks, their loan portfolios have grown more rapidly than banks in the 1990's and their net interest margins have remained above banks. In contrast, at commercial banks, these expenses have been declining slightly since 1993. With the unprecedented consolidation taking place in the banking industry through mergers and acquisitions, within the next decade, parity could be reached between the two. Credit union growth rates of equity capital have ranged from 11 percent in 1994 to 20 percent in 1992. These growth rates have mostly been 50 percent higher than bank equity growth.