How Well Have Social Economy Financial Institutions Performed During the Crisis Period? Exploring Financial and Social Efficiency in Spanish Credit Unions

  • Almudena Martínez-Campillo
  • Yolanda Fernández-Santos
  • María del Pilar Sierra-Fernández
Article

Abstract

As Social Economy financial institutions, credit unions have traditionally been considered less efficient than traditional banking entities. However, like banks and savings banks, they have to be as efficient and competitive as possible to survive in today’s business environment, especially at times of crisis. To date, there have been very few studies on their efficiency and practically none for the crisis period. Moreover, almost all the existing studies assess only financial efficiency, without considering their social function. This study examines the levels of both financial and social efficiency in Spanish credit unions as well as their main determinants during the recent crisis. We apply the two-stage double bootstrap data envelopment analysis (DEA) methodology based on panel data corresponding to all the credit unions active in Spain between 2008 and 2013. The empirical results indicate that financial and social efficiency achieved an acceptable level, although on average the former was slightly greater than the latter. We also find that both age and merger and acquisition activity were positively influential on the financial efficiency of credit unions but had a significant negative effect on their social efficiency. Moreover, the regional location of such entities and the financial crisis were also crucial determinants of both types of efficiency. Our findings are therefore useful for all the stakeholders of credit unions to know if these entities have been efficient according to a double bottom line accounting in the crisis period and hence to maintain successful social management that is compatible with satisfactory financial efficiency.

Keywords

Credit unions Crisis period Financial efficiency Social Economy financial institutions Social efficiency 

Abbreviations

DEA

Data envelopment analysis

UNACC

Unión Nacional de Cooperativas de Crédito (National Union of Credit Unions)

SMEs

Small and medium-sized enterprises

SFA

Stochastic frontier analysis

DMU

Decision making unit

CRS

Constant returns to scale

VRS

Variable returns to scale

GDP

Gross domestic product

EMPL

Employees

BRAN

Branches

EQUI

Equity

LOAN

Loans

DEPO

Deposits

SECU

Security investments

CSOC

Customer socialisation

FINC

Financial inclusion

SOCF

Social fund contribution

MEMB

Membership

AGE

Age

M&A

Merger and Acquisition activity

GROUP

Corporate group

REG

Regional location

CRISIS

Crisis

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Copyright information

© Springer Science+Business Media Dordrecht 2016

Authors and Affiliations

  • Almudena Martínez-Campillo
    • 1
  • Yolanda Fernández-Santos
    • 1
  • María del Pilar Sierra-Fernández
    • 1
  1. 1.Faculty of Economics and Business AdministrationUniversity of LeónLeónSpain

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