Measuring Technical Efficiency in Australian Credit Unions

Andrew Worthington

Manchester School, 1999, vol. 67, issue 2, 231-248

Abstract: Credit unions are small, cooperative, not‐for‐profit institutions—facts which usually distinguish them from other financial intermediaries. Whilst respecting the unique organizational and institutional features of credit unions, the present study also accepts the need for rigorous efficiency assessment. Using a sample of 233 Australian credit unions the study uses non‐parametric techniques to measure efficiency, followed by parametric techniques to attribute variation in efficiency. The results indicate that a large number of credit unions are best‐practice efficient, and any efficiencies found appear to flow from X‐inefficiencies rather than from the selection of an inappropriate scale of operations. All other things being equal, credit unions formed on the basis of a community bond, with a large asset base, and an orientation towards commercial loans will be relatively more efficient.

Date: 1999
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