Performance of Irish Credit Unions 2002 to 2010

Modelling the performance of Irish credit unions, 2002-2010

by Professor Colin Glass, Professor Donal McKillop and Barry Quinn

Abstract

This study employs the Cuesta et al. (2009) translog enhanced hyperbolic distance function to examine the performance of Irish credit unions. The modeling approach rewards credit unions for reducing undesirable outputs (impaired loans and investments) and for increasing desirable outputs and decreasing inputs. A number of findings emerge. 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 technical efficiency through expansion of desirable outputs (18.48%) and contraction of impaired loans and investments and inputs (16.6%) with larger, better capitalised, credit unions identified as more technically efficient. These findings are particularly pertinent given the restructuring proposals for Irish credit unions centred around amalgamations, (see, Irish Commission on Credit Unions, 2012)

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Forthcoming  in Financial Accountability and Management in March 2015