Does Size Matter? Economies of Scale in the Credit Union Industry

Su-Jane Chen
2017 International Journal of Trade, Economics and Finance  
This study employs a paired difference approach to explore economies of scale in the credit union industry. Tests performed on aggregate credit union data strongly support the existence of scale economies. Empirical results suggest that the larger the credit union size is, the more efficiently it operates in terms of operating costs as a percentage of both total assets and operating income. Moreover, economies of scale evidenced in this research have become more pronounced post 2008 financial
more » ... st 2008 financial crisis, supporting the notion that they change over time. This documented enhancement in scale economies provides the rationale for the industry's proliferating consolidations via merger and acquisition activities. Index Terms-Credit unions, economies of scale, operational efficiency.
doi:10.18178/ijtef.2017.8.6.575 fatcat:coxyhrb6anbptcsrhqu47ufdqi