Graduation Year

Spring 2012

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Darren Filson

Reader 2

Joshua G. Rosett

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Terms of Use for work posted in Scholarship@Claremont.

Rights Information

© 2012 Aisling M. Scott

Abstract

The objective of this paper is to explain the variation in efficiency of credit unions over the past decade. This study creates an evaluation metric for credit union performance by using a nonparametric technique called data envelopment analysis (DEA). Efficiency is based on the credit unions ability to maximize the members’ benefits by providing adequate loans and savings accounts at low prices while minimizing the resources used. The sample consists of 704 credit unions from 2001 to 2010. Several environmental characteristics were found to influence efficiency. The findings demonstrate evidence for economies of scale as number of members, average savings size, and total assets all positively influence efficiency. The results also indicate that federal charter, number of branches, share of real estate loans, and average loan size negatively correlate with efficiency.

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