The impact of regulatory reform on the portfolio performance of Australiancredit unions

This paper applies a portfolio approach to examine the effectiveness of the Financial Institutions (FI) Code (1992) in achieving the twin regulatory o bjectives of stability and efficiency in Australian credit unions. A model is developed to examine the allocation of credit union portfolios in unregu lated and regulation-constrained environments. The impact of regulatory con straints on portfolio performance prior to and following the introduction o f the FI Code is thus assessed. The paper concludes that, overall, the FI C ode increased both the stability and the allocative efficiency of credit un ions over that of previous regulatory regimes.