Economies of Scale in Credit Unions: An Update

Kohers, Theodor; Mullis, David

doi:10.1111/j.1540-6288.1987.tb01207.x

Cited by 4 publications

(7 citation statements)

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“…Following [3], [12], [14], the research uses two ratios, operating expenses to total assets and operating expenses to operating income, to measure operational efficiency. The lower the ratios are, the more efficient the operation is.…”

Section: B Methodologymentioning

confidence: 99%

“…For each size group, the respective means of the two ratios over the entire study period and the two subsample periods (pre 2009 and post 2008) are first calculated. Based on [3], [7], paired t tests are then employed to detect scale economies or lack thereof. To be more specific, the six size groups are paired with one another, yielding 15 size group comparisons for each sample period.…”

Section: B Methodologymentioning

confidence: 99%

“…This unique owner-consumer nature poses a conflict of interest between existing members and potential new members as a credit union grows. As pointed out by [1] and reiterated by [2], [3], conflicts may arise among members as an increase in demand for loans by new members drives up the borrowing rates while a rush of deposits by new members pushes down the savings rates, both of which are detrimental to the growing credit union's current members. The authors then claim that economies of scale serve as an ideal mechanism to alleviate such potential member conflicts and to conserve the cooperative nature of credit unions.…”

Section: Introductionmentioning

confidence: 99%

“…References [1], [3]- [9] support economies of scale. In contrast, [2], [10] document diseconomies of scale.…”

Section: Introductionmentioning

confidence: 99%

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Does Size Matter? Economies of Scale in the Credit Union Industry

Chen¹

2017

IJTEF

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Abstract-This study employs a paired difference approach to explore economies of scale in the credit union industry. Tests performed on aggregate credit union data strongly support the existence of scale economies. Empirical results suggest that the larger the credit union size is, the more efficiently it operates in terms of operating costs as a percentage of both total assets and operating income. Moreover, economies of scale evidenced in this research have become more pronounced post 2008 financial crisis, supporting the notion that they change over time. This documented enhancement in scale economies provides the rationale for the industry's proliferating consolidations via merger and acquisition activities.Index Terms-Credit unions, economies of scale, operational efficiency.

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Section: B Methodologymentioning

confidence: 99%

Section: B Methodologymentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

“…References [1], [3]- [9] support economies of scale. In contrast, [2], [10] document diseconomies of scale.…”

Section: Introductionmentioning

confidence: 99%

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Does Size Matter? Economies of Scale in the Credit Union Industry

Chen¹

2017

IJTEF

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“…Early studies in this area use either ratio analysis or simple production and cost functions to assess performance. For the US see, for example, Taylor ( and ), Wolken and Navratil () and Kohers and Mullis ( and ). For Australia, see Crapp (), Brown and O'Connor () and more recently Esho ().…”

Section: Efficiency Studiesmentioning

confidence: 99%

Modelling the Performance of Irish Credit Unions, 2002 to 2010

Glass¹,

McKillop²,

Quinn

2014

Financ Acc Manag

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This study undertakes a modeling based performance assessment of all Irish credit unions between 2002 and 2010, a particularly turbulent period in their history. The analysis explicitly addresses the current challenges faced by credit unions in that the modeling approach used rewards credit unions for reducing undesirable outputs (impaired loans and investments) as well as for increasing desirable outputs (loans, earning assets and members’ funds) and decreasing inputs (labour expenditure, capital expenditure and fund expenses). The main findings are: credit unions are subject to increasing returns to scale; technical regression occurred in the years after 2007; there is significant scope for an improvement in efficiency through expansion of desirable outputs and contraction of undesirable outputs and inputs; and that larger credit unions, that are better capitalised and pay a higher dividend to members are more efficient than their smaller, less capitalised, and lower dividend paying counterparts.

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Credit Unions: A Theoretical and Empirical Overview

McKillop¹,

Wilson²

2011

Financial Market

103

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In 2009 there were over 49,330 credit unions across 98 countries with more than 184 million members and approximately $1,354 billion in assets. There is a great diversity within the credit union movement across these countries. This reflects the various economic, historic and cultural contexts within which credit unions operate. This paper traces the evolution of the credit union movement. It examines credit union objectives, and considers issues relating to efficiency, technology adoption, product diversification, merger, failure and demutualization. The regulatory environment within which credit unions operate is also explored under the themes of interest rate regulation, common bond requirements, taxation, deposit insurance and capital regulation. The overview also considers demutualization and the costs and benefits to credit unions of altering their organizational form.

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Economies of Scale in Credit Unions: An Update

Cited by 4 publications

References 0 publications

Does Size Matter? Economies of Scale in the Credit Union Industry

Does Size Matter? Economies of Scale in the Credit Union Industry

Modelling the Performance of Irish Credit Unions, 2002 to 2010

Credit Unions: A Theoretical and Empirical Overview

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