Governance and financial efficiency of Brazilian credit unions

Abstract

Purpose This paper aims to evaluate the relation between governance and financial efficiency of credit unions in Brazil. The study shows how poor financial efficiency in credit unions may result from undesirable configurations in executive management and other variables related to governance. Design/methodology/approach The study develops an innovative methodology to classify credit unions according to the level of governance using indicators of representativeness and participation, leadership, management and supervision. This methodology integrates the use of multiple correspondence and cluster analysis. The study then applies stochastic frontier models to analyze how governance affects the indicators of financial efficiency. Findings The results highlight that better governance substantially increases the efficiency of credit unions in terms of a higher level of credit operations per institution. Originality/value The paper uses a pioneering survey applied by the Central Bank to almost the total population of credit unions in Brazil. The results highlight how to operationalize a subjective and broad concept related to cooperative governance to identify the remarkable impacts of good governance practices on the financial efficiency of credit unions.

Effects of informal controls and psychological empowerment on job satisfaction

“…Credit unions operate in a similar context to that of banks, but they have their own particularities, such as the intention to maximize the benefits for their members (Maia et al, 2019;Smith et al, 1981). These unions act in enabling access to credit for a wide variety of social classes, which promotes economic growth and local development at various levels, including in the Brazilian context (Favalli et al, 2020). The operational principles of the World Council of Credit Unions (WOCCU) highlight the role of these organizations in promoting human and social development, contemplating aspects such as the commitment of credit unions to hiring and retaining a qualified workforce, as well as promoting the well-being of members/leaders/employees (Marcoux et al, 2021;Mathuva et al, 2017).…”

Reflexos da orientação empreendedora no desempenho das cooperativas de crédito do mercado brasileiro

“…A cooperativa de crédito é uma instituição financeira formada por uma associação autônoma de pessoas unidas voluntariamente, com forma e natureza jurídica próprias, de natureza civil, sem fins lucrativos, constituída para prestar serviços a seus associados (Banco Central do Brasil [Bacen], 2018). Além disso, visa à apresentação de soluções financeiras e à geração de renda para seus cooperados, e pode também ser entendida como mecanismos promotores da intermediação financeira entre seus associados e o mercado (Da Silva et al, 2017;Favalli et al, 2020).…”

“…Desse modo, os recursos captados pelas cooperativas de crédito são aplicados no seu local de origem, de forma a aumentar a produção e atender aos fins sociais decididos pelos cooperados, nas assembleias (Portal Cooperativismo Financeiro [PCF], 2018). Fica evidente que a sobrevivência das cooperativas de crédito está atrelada à rentabilidade, à prestação dos serviços e à operação de captação e concessão de créditos aos cooperados (Paiva & Santos, 2017;Favalli et al, 2020).…”

Influence of Board Attributes on Board Roles Performance in Savings and Credit Co-operative Societies (SACCOS) in Tanzania

“…Savings and Credit Co-operative Societies (SACCOS) are member-based and democraticallycontrolled microfinance institutions (MFIs). They are operated by extending financial services such as savings and credit at fair interest rates for members to maintain a common bond (Almehdawe, Khan, Lamsal & Poirier, 2020;Favalli, Gori Maia & da Silveira, 2020). The common bond membership is drawn from certain socio-cultural affiliations based on neighbourhood, ethnicity, tribes, religious and organizations (Goddard, McKillop, & Wilson, 2008).…”