Eﬃciency of credit unions in Brazil: an analysis of the evolution in ﬁnancial intermediation and banking service
Keywords:Credit unions, Efﬁciency, Financial intermediation, Banking services
Purpose – The purpose of this paper is to evaluate the efﬁciency in ﬁnancial intermediation and the cost efﬁciency in banking service of credit unions in Brazil, based on essentially accounting variables, and to analyze the temporal evolution of the efﬁciency of these cooperatives.
Design/methodology/approach – With a sample of 315 cooperatives over the period from 2007 to 2014, this research uses a two-stage process: application of regression models with panel data to verify which variables are related to the deﬁned outputs, with the reduction of 31 variables to 8 variables in both models; and application of the data envelopment analysis method to obtain an analysis of credit unions’ efﬁciency.
Findings – The results demonstrate a high level of efﬁciency in ﬁnancial intermediation, with low variation over time, associated with a low efﬁciency in the banking service, in which few cooperatives have remained efﬁcient over time. In addition, the cooperatives with highest efﬁciency in ﬁnancial intermediation were also the most efﬁcient in providing services.
Research limitations/implications – This research has some limitations about the capacity of the proxies used to capture the real effect of the variables and assumptions of economic relations resulting in restrictions to generalize the results.
Practical implications – Cooperatives are usually analyzed under just one dimension. By separating the analysis into ﬁnancial intermediation and banking services, cooperatives that are more efﬁcient in each dimension can be identiﬁed, in addition to analyzing the evolution over time. The authors found that
efﬁciency tends to be lower in banking services, and few cooperatives remain at the highest level of efﬁciency over time in both models.
Social implications – Credit unions provide an important service in the banking and credit market. Therefore, understanding its operation and the characteristics that inﬂuence its efﬁciency allows a better management of the cooperatives themselves and a greater understanding of this important segment of the ﬁnancial market.
Copyright (c) 2020 Manuela Gonçalves Barros, Marcelo Botelho da Costa Moraes, Alexandre Pereira Salgado Junior, Marco Antonio Alves de Souza Junior
This work is licensed under a Creative Commons Attribution 4.0 International License.
Management Department of the School of Economics, Management and Accounting of the University of São Paulo.
The publication of article segments is allowed, subject to prior authorization and source identification.
Copyright is regulated under Licença Creative Commons Attribution