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What About the Social Efficiency in Credit Cooperatives? Evidence from Spain (2008–2014)

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Credit cooperatives are financial intermediaries that pay attention to social criteria. Thus, if such entities want to survive and thrive in the new international context, they cannot ignore their inefficiencies in both the financial and social dimensions of their activity. However, previous research on efficiency in credit cooperatives is very limited and only considers their financial activity. To date, no study has been published giving evidence through indicators on whether these banking institutions are socially efficient. This paper therefore constructs a social efficiency index of Spanish credit cooperatives during the period 2008–2014 and examines its main explanatory factors. After applying a two-stage Data Envelopment Analysis approach, the results from the first stage indicate that, on average, the social efficiency of Spanish credit cooperatives reaches an acceptable level of 66.42 %. Second-stage truncated regression reveals that entities with a greater proportion of branches in urban areas are socially less efficient, whereas both their size and the number of service points have a positive effect. Interestingly, social efficiency also varies significantly depending on the regional location of credit cooperatives in Spain. As a result, our findings enable these Social Economy financial institutions to both know their performance relative to their social activity and use this information to improve their competitiveness in the future.

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  1. 1.

    The minimum acceptable value for technical efficiency indicators is 50 %, while the lowest threshold indicating that an entity is seriously efficient is 90 % (Cooper et al. 2007).

  2. 2.

    Paradoxically, although there is no empirical evidence on the social efficiency of credit cooperatives located in developed countries, there have been many recent studies on this subject for microfinance institutions (MFIs) working in developing countries (Piot-Lepetit and Nzongang 2014; Wijesiri et al. 2015; Mia and Chandran 2015, among others). Microfinance institutions are credit entities that also have an important social role, mainly in poorly-developed countries where they give loans to social groups that are excluded from the traditional financial system. It is precisely the loans policy of such entities that prevents the existing evidence on their social efficiency from being transferred to credit cooperatives.

  3. 3.

    See Wilson (1993, 2010) for details.

  4. 4.

    See Greene (1993), Berger and Mester (1997) and Coelli et al. (1998) for details on both frontier methods.

  5. 5.

    The “constant returns to scale (CRS) DEA model” was proposed by Charnes et al. (1978) and is only appropriate when all organizations operate at an optimal scale, which is difficult because of the existence of imperfect competition, government regulations, constraints on finance, etc. For this reason, Banker et al. (1984) proposed the “variable returns to scale (VRS) DEA model”.

  6. 6.

    The conventional DEA model, which is applied in all prior studies on efficiency in credit cooperatives, gives the values for original efficiency without taking into account any sample noise in the estimates, so the results may be misleading.


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Correspondence to Almudena Martínez-Campillo.

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Martínez-Campillo, A., Fernández-Santos, Y. What About the Social Efficiency in Credit Cooperatives? Evidence from Spain (2008–2014). Soc Indic Res 131, 607–629 (2017). https://doi.org/10.1007/s11205-016-1277-6

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  • Social efficiency
  • Credit cooperatives
  • Spain
  • DEA approach
  • Truncated regression