Category: Working papers

A Sustainable Business Model Strategy for Irish Credit Unions


One of my latest pieces of research investigates business model complexity within the Irish credit union movement using a novel technique which allows identification of a multi-layered system based on financial viability characteristics.

Study summary

This study examines the business model complexity of Irish credit unions using a latent class approach to measure structural performance over the period 2002 to 2013. The latent class approach allows the endogenous identification of a multi-tiered business model based on credit union specific characteristics. The analysis finds a three tier business model to be appropriate with the multi-tier model dependent on three financial viability characteristics. This finding is consistent with the deliberations of the Irish Commission on Credit Unions (2012) which identified complexity and diversity in the business models of Irish credit unions and recommended that such complexity and diversity could not be accommodated within a one size fits all framework. The analysis also highlights all tiers are subject to decreasing returns to scale at the sample mean. This may suggest that credit unions would benefit from a reduction in scale or perhaps that there is an imbalance in the present change process. Finally, relative performance differences are identified for each tier in terms of technical efficiency. This suggests that there is an opportunity for credit unions to improve their performance by using within tier best practice or alternatively by switching to another tier.

This study is part of the Not-for-profit and Public sector Research (CNPR) centre’s working paper series.  For a copy of the full paper please visit the financial institutions section of:

Investigating financial intermediaries’ performance determinants when ‘best practice’ rewards regulatory compliance to reduce bad debt

(J. Colin Glass, Donal G. McKillop and Barry Quinn)










This study employs the Cuesta et al. (2009) translog enhanced hyperbolic distance function model to examine the performance of Irish credit unions. The modeling approach rewards credit unions for reducing undesirable outputs and for increasing desirable outputs and decreasing inputs. A number of findings emerge. First, credit unions are subject to increasing returns to scale with larger credit unions also more efficient than their smaller counterparts. Second, credit unions have secured technical progress via investment in interactive website facilities for product and service delivery. Third, regulatory pressure to reduce bad loans will have a beneficial impact on credit union output and performance.

JEL classification: G21

Keywords: Credit unions, Efficiency, Bad debts

Submitted to Journal of Business, Finance and Accounting April 2010