Category: Research

McKillop D.G. and Quinn B (2010) ‘A Performance Overview of Irish Credit Unions’

McKillop D.G. and Quinn B (2010) ‘A Performance Overview of Irish Credit Unions’ published in spring edition of CU Focus, a quarterly publication produced by the Irish League of Credit Unions.


Credit unions are structured around a well defined membership; they are not subject to shareholders’ profit expectations; and by legislation cannot provide high risk structured financial products. For these reasons credit unions can be expected to be insulated from the worst excesses of the current turmoil in financial markets. There are however clouds on the horizon. Bad debts[1] and loan arrears are on the rise due in part to the general economic downturn but also due to poor investment decisions made by some credit unions. These poor investments decisions have been exacerbated due to the inexorable rise in the share of investments in many credit union portfolios.  The average loan to asset ratio for Irish credit unions has declined from 56.97% in 2002 to 47.16% (2005) to 47.38% (2007) and there has been a commensurate increase in investments as a percentage of assets from 37.65% in 2002 to 48.12% in 2005 and to 48.25% in 2007…

[1] In 2002 bad debt write-off as a percentage of gross loans was approximately 0.38%, rising to 0.56% in 2005 and to 0.60% in 2007. While this percentage level of bad debt is low compared to other retail financial institutions it is an accumulating problem.

Royal Melbourne Institute of Technology University academic seminar

On Friday the 26th of April i present my second paper of my PhD

“Financial Institutions as producers of desirable and undesirable outputs : An hyperbolic distance function analysis of efficiency determinant”

This was the University where i completed my Masters and where i was awarded the FINSIA award for academic excellence for coming top of the class.  My Audience was most of the academic staff from the Economic and Finance department, and the feedback was good.

University of Melbourne Brown Bag Session

On the Tuesday the 22nd of March i presented my second paper of my PhD

Financial institutions as producers of desirable and undesirable outputs: A parametric distance function analysis of potential efficiency determinants

There was an academic conference(“Finance down Under“) being hosted by the University at the time so consequently my audience was a smattering of local academic and a number of international visitors.

There was an excellent calibre in attendance, which produced some excellent feedback that we hope to incorporate in future work.

Irish Credit Union’s Cost Efficiency


McKillop D.G. and Quinn B., (2009) “Cost Performance of Irish Credit Unions” Journal of Cooperative Studies, VOL 42, 1 , P22-36(14).



There are 424 credit unions in Ireland with assets under their control of €14.3bn and a membership of 2.5m which equates to about 66% of the economically active population, the highest penetration level of any country. That said, the Irish movement sits at a critical development stage, well behind mature markets such as Canada and the US in terms of product provision, technological sophistication, fragmentation of trade bodies and regulatory environment. This study analyses relative cost efficiency or performance of Irish credit unions using the popular frontier approach which measures an entity’s efficiency relative to a frontier of best practice. Parametric techniques are utilised, with variation in inefficiency being attributed to credit union-specific factors. The stochastic cost frontier parameters and the credit-union specific parameters are simultaneously estimated to produce valid statistical inferences. The study finds that the majority of Irish credit unions are not operating at optimal levels. It further highlights the factors which drive efficiency variation across credit unions and they include technological sophistication, ‘sponsor donated’ resources, interest rate differentials and the levels of bad debt written off.


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