Performance assessment of the operations strategy of credit unions

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Poliana Martins ◽  
Edson Pinheiro de Lima ◽  
Sandro César Bortoluzzi ◽  
Sergio E. Gouvea da Costa
Keyword(s):  
Performance Assessment ◽  
Multicriteria Analysis ◽  
Credit Unions ◽  
Credit Union ◽  
Research Strategy ◽  
Operations Strategy ◽  
Organisational Performance ◽  
Data Set ◽  
Content Type ◽  
Sources Of Knowledge

PurposeIn this study, the performance assessment of credit unions is developed, seeking to demonstrate how the content of their operations strategy is present in the structuring of unique models of organisational performance assessment. The main objective is to compare sources of knowledge through the content analysis of the service operations strategy as proposed by the literature and validated by specialists.Design/methodology/approachThis research is a qualitative study that uses the knowledge of specialists to frame a performance assessment structure applied to credit unions. The research strategy is based on multicriteria analysis, and the selected techniques are based on the MCDA-C procedure, that is, the processes of structuring, evaluating and recommending improvements.FindingsThe research results provided: a data set external to the context that serves as theoretical support for the comparisons made; the structuring of 4 unique organisational performance assessment models carried out through the MCDA-C procedure; conceptual interpretation using the lens of the operations strategy in the cognitive maps of the assessment models, which identifies the operations strategy carried out; and comparison of the result models that show their uniqueness.Originality/valueThe comparison between the origins of knowledge is highlighted, and the demonstration of the content was proposed by the literature and by specialists to evaluate the performance in operations. This was then compared with the content constructed with credit union managers in structuring models based on the singularities of the respective contexts. The theory was compared to practice, and it was demonstrated how the content of the operations regarding the performance could be used in decision contexts.

Factors affecting Canadian credit unions' financial performance

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Eman Almehdawe ◽  
Saqib Khan ◽  
Manish Lamsal ◽  
Angèle Poirier
Keyword(s):  
Panel Data ◽  
Financial Performance ◽  
Performance Metrics ◽  
Service Providers ◽  
Credit Unions ◽  
Credit Union ◽  
Fixed Effect ◽  
Capital Adequacy ◽  
Management Service ◽  
Content Type

PurposeThe purpose of this paper is to identify the factors that affect the Canadian credit unions' financial performance which play an important role in providing financial services to the agriculture sector.Design/methodology/approachWe surveyed the literature to identify different performance metrics of credit unions and a set of possible factors that might affect their performance. We collected data related to different dependent and independent variables from financial statements and balance sheets of 189 credit unions and from general websites like Statistics Canada and Bank of Canada. Then, we imputed the missing data and developed fixed effect and random effect panel data regression models. First, we used return on asset as the main dependent variable. Afterwards, we used six performance metrics to check the robustness of our models.FindingsFrom an initial list of 16 possible factors that might affect the financial performance of a credit union, we were able to narrow the factors down to the nine most significant ones. It was observed that credit unions in the prairies were more likely to perform well financially as compared to other provinces. Membership size, the size of a credit union in terms of total assets, capital adequacy ratio, market penetration, diversification of income, inflation rate and provincial GDP and interest rates were significant. The cross-sectional analysis performed confirmed the findings of the fixed effect panel data models.Research limitations/implicationsThis study has a limitation concerning the number of years included into the time series analysis. Only ten years worth of data were available.Practical implicationsResults provide credit union management, service providers for credit unions and market analysts with a current understanding of how different internal and external factors might affect return on assets, return on equity, delinquency, cash ratio, efficiency ratio, asset growth and loan growth. Our models can be used to predict financial performance of credit unions based on the defined significant variables.Originality/valueAlthough there is a wide body of literature that studies performance of banks, not many studies focus on credit unions. Moreover, the existing studies are based on credit unions in United States or Europe, and literature on Canadian credit unions is scarce. The data collected covered 189 Canadian credit unions. To our knowledge this is the first study that looks at the various internal, external and regulatory factors together that affect the credit unions in various jurisdictions of Canada.

Technical efficiency of Microfinance Institutions (MFIs)

2016 ◽  
Vol 15 (3) ◽  
pp. 224-239 ◽  
Author(s):  
Bereket Zerai Gebremichael ◽  
Hailemichael Tesfay Gessesse
Keyword(s):  
Technical Efficiency ◽  
Stochastic Frontier Analysis ◽  
Credit Unions ◽  
Microfinance Institutions ◽  
Ownership Type ◽  
Data Set ◽  
Content Type ◽  
Frontier Analysis ◽  
Significant Difference ◽  
Efficiency Performance

Purpose The paper aims to evaluate the technical efficiency of African Microfinance Institutions (MFIs) and examine if there is performance difference by ownership type. Design/methodology/approach The paper applies stochastic frontier analysis (SFA) assuming that the translog production functions to estimate the technical efficiency of 134 Microfinance Institutions operating in 36 African countries. The parametric SFA is preferred over the non-parametric, as it captures the random and inefficiency effects. Though the suitable approach is SFA, for the purpose of consistency and robustness of the results, the alternative data envelopment analysis (DEA) approach is also run and the results are compared with those derived from SFA. Findings In our analysis we have found that African MFIs are technically inefficient. The average technical efficiency for the sample institutions is 0.489, which is quite low and suggests that on average, African MFIs are achieving only 48.9 per cent of the maximum achievable output. Our results also revealed the presence of significant technical inefficiencies with considerable differences in inefficiency among the MFIs. Further, we found statistically significant difference in the efficiency performance among the different ownership types of MFIs. More importantly, the NGO and non-bank financial institutions are relatively more efficient, while the cooperatives/credit unions are the least efficient. Research limitations/implications The study contributes to the continuing debate on the effect of ownership type on performance of institutions. Moreover, it indicates the importance of using certain approaches and complementing them with other alternatives for a better insight. Practical implications The study found that the least efficient type of MFIs are the cooperatives/credit unions. This might be related to the nature of these institutions where the members are owners and borrowers. This might affect efficiency negatively, although it may somehow address the agency problem. Originality/value This paper provides an evidence on efficiency performance of African MFIs, taking a large data set and applying SFA. DEA was also used to complement the SFA results. It provides useful empirical evidence and perspective on this important issue for policy makers and analysts.

Credit unions’ acquisitions of banks and thrifts

2019 ◽  
Vol 11 (3) ◽  
pp. 306-318
Author(s):  
David A. Walker ◽  
Kathryn I. Smith
Keyword(s):  
Capital Structure ◽  
Design Methodology ◽  
Economies Of Scale ◽  
Financial Analysis ◽  
Credit Unions ◽  
Credit Union ◽  
Social Implications ◽  
Economies Of Scope ◽  
Content Type ◽  
Practical Implications

Purpose In total, 14 credit unions have acquired 16 banks and savings institutions since 2012; 7 additional acquisitions are in progress and are expected to close before year-end 2019. The analysis of the population of these acquisitions spans the paths of annual differences in CAMEL ratios. Most acquirers have a somewhat revised capital structure and are often benefiting from economies of scope, as well as economies of scale. Since their acquisitions, the acquiring credit unions have become less risky, measured by simulated CAMEL ratios, and they are lending a larger share of their deposits. There is no apparent financial reason to discourage credit unions from acquiring additional banks and savings institutions. The National Credit Union Administration does not need to be particularly hesitant to allow credit unions to acquire banks and thrifts. Design/methodology/approach Financial analysis is done via simulated CAMEL ratios. Findings After acquiring banks, credit unions are less risky and lend a greater share of their deposits. Research limitations/implications The study analyzes the population of the credit unions that have acquired banks since 2012, but the population consists of 14 banks acquiring 16 credit unions. Practical implications Credit unions should not be prohibited from further acquisitions of banks and thrifts. Social implications Credit union members are better served after a credit union acquires a bank. Originality/value No previous study has explored the effects of credit unions acquiring banks and thrifts, which began in 2012.

Income structure, diversification strategy and owners’ benefit in cooperative financial institutions

2020 ◽  
Vol 16 (4) ◽  
pp. 481-500
Author(s):  
Hoang Van Cuong ◽  
Hiep Ngoc Luu ◽  
Loan Quynh Thi Nguyen ◽  
Vu Tuan Chu
Keyword(s):  
Financial Institutions ◽  
Credit Unions ◽  
Credit Union ◽  
Least Square ◽  
Policy Implications ◽  
Diversification Strategy ◽  
Income Diversification ◽  
Significant Drop ◽  
Content Type ◽  
Common Bond

PurposeThe purposes of this paper are twofold. First, it analyses the income structure in cooperative financial institutions and examines how traditional and non-traditional incomes are related. Second, it evaluates whether increasing diversification towards non-traditional incomes facilitates or hampers the benefits of financial cooperative owners.Design/methodology/approachData are collected from over 3,100 US credit unions over the period of 1994–2016. A number of modern econometric techniques are employed throughout the analysis, including the use of panel fixed effect, generalised method of moments (GMM) and two-stage least square (2SLS) methodologies.FindingsUsing US credit unions as the empirical setting, the empirical results reveal that the expansion of traditional income leads to a corresponding increase in income from non-traditional activities. However, an increasing reliance on non-traditional income causes a significant drop in interest margins. The authors also find that the extent to which income diversification affects owner benefit varies across credit union types and period of time. While income diversification negatively affects owners' benefits in single common bond credit unions, it has no significant influence on multiple common bond and community credit union owners' benefits. Third, diversification can be beneficial during crisis time, but can be detrimental to owner benefit during normal time.Originality/valueThis paper provides some of the first empirical investigations on the diversification strategy of cooperative financial institutions. Therefore, the results offer significant policy implications for policymakers and market participants on whether financial cooperatives should diversify or specialise.

scholarly journals Credit unions, co-operatives, sustainability and accountability in a time of change

2019 ◽  
Vol 46 (2) ◽  
pp. 309-323 ◽  
Author(s):  
Akis Kleanthous ◽  
Robert A. Paton ◽  
Fiona M. Wilson
Keyword(s):  
Financial Crisis ◽  
Credit Unions ◽  
State Intervention ◽  
Credit Union ◽  
Content Type ◽  
Stakeholder Relationships ◽  
Study Approach ◽  
Governance Model ◽  
First Time

Purpose The financial crisis of 2008 resulted in calls for change. Commentators suggested that co-operatives, in particular credit unions, could provide accountability and sustainability through their open governance and mutual status. However, such suggestions assumed that co-operative principles and practice continued to underpin the efficacy of co-operative banking, and that credit unions, one of the most prevalent forms of co-operative banking, could offer a viable financial alternative. Instead, in the case of Cyprus, the financial crisis and the associated aftershocks triggered the nationalisation and demutualisation of credit unions. This prompted the researchers to question both the viability of a co-operative banking future and the extent to which co-operative principles were shaping decision making, governance, accountability and sustainability. The paper aims to discuss these issues. Design/methodology/approach A case study approach was adopted to explore the degree to which co-operative principles still shaped credit union thinking and stakeholder relationships. Findings As is the case elsewhere within the co-operative movement, the findings point the fact that governance is weaken by the low membership participation and that the principles are no longer universally applied. Credit unions, if not co-operative banking, may not offer the financial assurances that commentators have called for. Moreover, the guiding principles may no longer be embedded within the fabric of the movement. Practical implications Findings are important for practitioners/supervisory body as they highlight possible impacts on co-operative’ future and especially on their governance model and level of autonomy and independence in case of state intervention. Originality/value The research undertaken is original as it is the first time credit unions in Cyprus were examined for adherence to co-operative principles.

A comparison of bank and credit union growth around the financial crisis

2020 ◽  
Vol 35 (1) ◽  
pp. 25-44
Author(s):  
Wenling Lu ◽  
Judith Swisher
Keyword(s):  
Financial Crisis ◽  
Growth Rates ◽  
Commercial Banks ◽  
Credit Unions ◽  
Credit Union ◽  
Test Results ◽  
Net Charge ◽  
Content Type ◽  
Union Growth ◽  
Recent Financial Crisis

PurposeThe purpose of this research is to examine the growth rates of commercial banks and credit unions around the financial crisis and recovery. Credit unions are analyzed as a group and by field of membership. Specifically, this research analyzes the growth rates of assets, deposits, and loans.Design/methodology/approachThis research employs univariate tests of differences to examine the median growth rates for commercial banks and credit unions. Unbalanced pool regressions analyze growth rates during the pre-crisis, crisis, and recovery periods, controlling for size, net charge-offs, and unemployment.FindingsUnivariate test results that control for size show that banks grow at faster rates than credit unions for most of the pre-crisis years. However, medium sized credit unions grow at faster rates for most of the crisis and recovery years. Results of unbalanced pool regressions suggest that, overall, credit unions grow at slower rates than do banks. However, during the crisis and recovery, credit union growth is significantly greater than that of banks, after controlling for net charge-offs, size, and unemployment. Credit union growth varies by field of membership type.Originality/valueAlthough a large volume of research examines commercial bank performance around the financial crisis, only a few papers assess the performance of credit unions. And very few papers compare commercial banks and credit unions. This paper explores how the recent financial crisis influenced the growth of commercial banks and credit unions from 2005 to 2013.

The emerging work system and strategy for skills transition in South Africa

2022 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Olorunjuwon Michael Samuel ◽  
Tshegofatso Moagi
Keyword(s):  
South Africa ◽  
Public Perception ◽  
Policy Formulation ◽  
Research Strategy ◽  
Skills Development ◽  
Structured Interviews ◽  
Cross Sectional ◽  
Data Set ◽  
Content Type ◽  
Work System

Purpose The rapidly emerging digital work system, accentuated by technological innovation, has dramatically changed the nature of skill-sets required for employees to perform their tasks effectively at the workplaces. This paper aims to examine the skills development strategies that organizations in South Africa are adopting in the transitioning of their respective workforces to fit the skills dynamics of the emerging work system. Design/methodology/approach The paper uses the interpretive qualitative research strategy to draw evidence from semi-structured interviews conducted on 38 respondents, using the thematic analytical process to derive themes embedded in the data set. Findings Based on the strength of data analysis, this paper identified two broad themes and six sub-themes that are critical for the transformation and transition of existing pool of skills for the emerging work system in South Africa. Research limitations/implications The research lacks ability to be generalized, which is a methodological limitation that is inherently associated with cross-sectional design and qualitative strategy in terms of causality and generalizability of findings. Originality/value The main value-add of this paper is the development of evidence-based research outcomes that provide both theoretical and practical framework for skills development and transition initiatives that are imperative for policy formulation. The paper responded to, and advanced the respective works of Hirschi (2017), Sharma et al. (2021) and Barley et al. (2017), by establishing the following strategic themes that are critical for skills development and transition mechanisms in the emerging work system: stakeholder relationship, media and public perception, learning organization, higher education system, continuous skills development and technology and job losses.

A methodology for enterprise-wide risk assessment in small banks and credit union

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Philippa Duncan
Keyword(s):  
Risk Assessment ◽  
Risk Management ◽  
Money Laundering ◽  
Financial Institutions ◽  
Rapid Evolution ◽  
Credit Unions ◽  
Credit Union ◽  
Content Type ◽  
Financial Crimes ◽  
Compliance Program

Purpose This paper aims to provide an easy to follow, practical guide for small traditional banks and credit unions to conduct an enterprise-wide risk assessment of the financial institution’s anti-money laundering compliance program. Design/methodology/approach Information was collected from relevant documents published by global standard setters in the disciplines of anti-money laundering, financial crime prevention and risk management. The data was integrated with common challenges experienced by small financial institutions to produce an application-based guide that practitioners can readily implement. Findings Though not a new concept, macro-level financial crises and institutional level financial crimes have influenced the rapid evolution of risk management in financial institutions over the past three decades. Small unsophisticated banks and credit unions are expected to now perform an internal risk assessment. An abundance of information is available on risk assessment, but small institutions remain challenged in finding a turnkey document that is readily actionable to stimulate a less arduous undertaking, especially given the institutions’ limited resources. Research limitations/implications The setting reflects small deposit-taking institutions with traditional services. It is tailored for easy understanding and practical use by the institutions. Originality/value This could influence small institutions to conduct enterprise-wide risk assessments and formulate and use more specific risk management policies.

Technical efficiency: the pathway to credit union cost efficiency in Ghana

2018 ◽  
Vol 44 (11) ◽  
pp. 1292-1310
Author(s):  
Benjamin Amoah ◽  
Kwaku Ohene-Asare ◽  
Godfred Alufar Bokpin ◽  
Anthony Q.Q. Aboagye
Keyword(s):  
Technical Efficiency ◽  
Cost Efficiency ◽  
Banking Sector ◽  
Returns To Scale ◽  
Credit Unions ◽  
Credit Union ◽  
Data Envelopment ◽  
Tobit Regression ◽  
Content Type ◽  
Macroeconomic Conditions

Purpose The purpose of this paper is to investigate the factors that tend to influence credit union efficiency, specifically examining cost efficiency (CE) and technical efficiency. Design/methodology/approach Using a two-stage method, the authors first estimate CE using Tones’ SBM data envelopment analysis method and technical efficiency in a variable returns to scale setting during the period 2008–2014. The authors estimate a mixed-effects and two-limit Tobit regression to examine the effect of credit union specific characteristics, banking industry and macroeconomic conditions, on efficiency. Findings Credit unions’ CE averaged 38.9 percent compared to 54.4 percent for technical efficiency. The authors find that technical efficiency does not translate into CE and vice versa. Practical implications The authors suggest that when targeting CE, credit union managers would have to make technical efficiency a priority. A monopolized and inefficient banking sector does not challenge efficiency improvement in the credit unions industry. Originality/value This study employs data from a frontier market.

scholarly journals Moderating effect of Firm Characteristics in the Financing Diversification – Performance nexus among Credit Unions in Kakamega County, Kenya

2016 ◽  
Vol 11 (5) ◽  
pp. 2988-2993
Author(s):  
Jonathan Mwau Mulwa
Keyword(s):  
Credit Unions ◽  
Credit Union ◽  
Firm Characteristics ◽  
System Research ◽  
Data Set ◽  
Moderation Effect ◽  
Management Structure ◽  
And Performance ◽  
The Relationship ◽  
A Performance

The last two decades has seen a lot of creativity and diversity in the funding strategies pursued by credit unions as a result of financial sector liberalization and competitive pressure in the financial system. Research has shown that this diversification is both beneficial and hurting at the same time. However, firm characteristics have not mostly been factored in the diversification – performance analysis though studies in other sectors underline their importance. This therefore prompted this study to analyze the moderation effect that firm characteristics – specifically age, size, members’ occupation and management structure of credit unions – could have on the relationship between diversification and performance of credit unions in Kenya. The study used a correlation analysis approach on a data set of sixteen credit unions in Kakamega County and found that whereas financing diversification had a significantly positive relationship with credit union performance; credit union size and members’ occupation significantly improved this relationship while age and management structure significant suppressed the relationship.

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