The economic efficiency of the Credit Department of Farmers' Associations in Taiwan

Ching-Cheng Chang and Tsung-Chuan Hsieh

Applied Financial Economics, 1998, vol. 8, issue 4, 409-418

Abstract: The efficiency performance of the Credit Department of Farmers Associations (CDFAs) in Taiwan is examined using a nonparametric programming approach. The findings show that most CDFAs are highly scale efficient, but the performance on technical and allocative efficiencies is not satisfactory. ANOVA and χ2 tests are used to examine the impact of environmental factors measured by an urbanization index, while Tobit analysis is used to identify the association between the efficiency indices and the accounting-based financial performance ratios. While some of the statistical inferences are consistent with the stated hypothesis, others are not. This implies that the increased competition created by financial deregulation could improve CDFA performance through changes in portfolio management decision making. On the other hand, the risk-efficiency trade-off should be taken into consideration by regulatory agencies to monitor the performance of the CDFAs.

Date: 1998
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DOI: 10.1080/096031098332943

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