detecting abnormal credit union performance abstract credit unions are an important financial intermediary but little credit union research is done a primary reason for the lack of research is the cooperative nature of the industry making traditional methods of detecting abnormal performance inappropriate this paper proposes two methods of detecting abnormal performance one parametric the other non parametric instead of testing the efficiency of the institution this paper proposes testing the return vector as indicated in the theoretical objective function of the member simulations demonstrate that both methods are correctly specified and powerful

missing risk sharing markets and the benefits of cross hedging in developing countries abstract we study the impact of exchange rate risk on an exporting firm in a developing country when there is no forward market in the foreign currency however there exists a forward traded cross hedging asset in this country by cross hedging its foreign exchange exposure the firm can increase its economic welfare export production increases and promotes international trade of the developing country if the spot rate of foreign exchange has some regression relationship to the price of the cross hedging asset we extend our results to the case of price as well as initial wealth uncertainty

non radial cost luenberger productivity indicator abstract this study decomposes cost inefficiency into technical and allocative components in a more general way based on the directional russell measure drm of fukuyama and weber 2009 with the allocative component being completely clear of technical inefficiency based on this decomposition we develop a cost oriented productivity indicator the cost luenberger productivity indicator cl which completely embraces the concept of cost minimization and provides four sources of productivity change technical efficiency change the change in allocative efficiency the shift of technology and the effect of input price change to illustrate the above decompositions of cost inefficiency and productivity change and to investigate whether the establishment of a financial holding company fhc offers a bank greater operating efficiency and an improvement in productivity change this study employs data on taiwan s banking industry covering the period 2006 2012

the evolution of cost productivity and efficiency among us credit unions abstract advances in information processing technology have eroded the advantages of small scale and proximity to customers that traditionally enabled small lenders to thrive nonetheless the membership and market share of us credit unions have increased though their average size has also risen we investigate changes in the efficiency and productivity of us credit unions during 1989 2006 by benchmarking the performance of individual firms against an estimated order quantile lying near the efficient frontier we construct a cost analog of the malmquist productivity index which we decompose to estimate changes in cost and scale efficiency and changes in technology we find that cost productivity fell on average across all credit unions but especially among smaller credit unions smaller credit unions confronted a shift in technology that increased the minimum cost required to produce given amounts of output all but the largest credit unions also became less scale efficient over time

are credit unions too small abstract u s credit unions serve 93 million members hold 10 of u s savings deposits and make 13 2 of all nonrevolving consumer loans since 1985 the share of u s depository institution asse

an economic theory of a credit union the majority of research to date on cus has been empirical cf cargill 1 and kidwell and peterson 7 yet there is serious need to develop a theoretical framework of cu behavior that incorporates their unique characteristics a cu is essentially a financial intermediation cooperative however the standard theoretical treatments of financial intermediaries cf meyer 8 and cooperative enterprises cannot be directly applied to model credit union behavior there are two principal characteristics of cus that prevent this first in a cu and cooperatives in general the members are both the owners of the organization and the consumers of its output or suppliers of its input one cannot simply assume that the members seek to maximize the profit generated by their transactions with the cu irrespective of the price and quantities of those same transactions thus models of a financial firm based on profit maximization cannot be directly translated to a cu environment second in a cu the membership provides both the demand for and supply of loanable funds the cu then intermediates between its member savers and member borrowers this heterogeneity is an inherent source of conflict between members clearly a cu cannot simultaneously maximize its dividend rate for savers and minimize its loan rate for borrowers since most theoretical models of cooperative enterprises assume a homogeneous member objective they are not generally applicable to cus there are two basic requirements for a framework to model cu behavior first the specification of the objective function should focus on the value of cu participation to the members this value should include the prices and quantities of transactions as well as any profit that results second the analysis should explicitly consider the possibility of conflict among members and the resolution of that conflict being a preference to either the borrowers or savers the existing literature on cus contains a wide variety of objective functions hempel and yawitz 5 ignore the owners are consumers issue and simply contend that cus like other financial intermediaries should maximize profit most writers however recognize that profit maximization would be a somewhat incongruous objective for an organization that typically labels itself not for profit murray and white 9 use cost minimization subject to an output constraint keating 6 employs the managerial discretion approach by maximizing the manager s utility function subject to minimum member benefit constraints taylor 11 12 suggests that the cu should minimize the difference between its average loan rate and savings rate paid smith 10 argues that the cu should

a theoretic framework for the analysis of credit union decision making this paper presents a formal theoretic framework to analyze credit union interest rates on loans and savings deposits the unique motivational and institutional features of a credit union in particular its structure as a financial service cooperative are used to develop the objective function this is based on a comparison of the credit union s rates to alternatively available market rates and includes parameters to recognize the possibility of borrower saver conflict the principal result is that the optimal rates and reactions to exogenous changes depend critically on the preference of the organization toward financial gain to the borrowing and saving members

the growth of us credit unions abstract the growth of us credit unions during the 1990s is investigated empirically using univariate and multivariate cross sectional and panel estimation techniques univariate tests of the law of proportionate effect suggest that in general large credit unions grew faster than their smaller counterparts on average credit unions with above average growth in one period tended to experience below average growth in the next smaller credit unions tended to have more variable growth than large ones while credit unions share a common co operative philosophy they differ in terms of age profile scope for membership growth charter type and financial structure and performance in estimations of a multivariate growth model most of these characteristics are found to have a significant influence on the size growth relationship while large state chartered credit unions grew faster than their smaller counterparts the reverse was true for federally chartered credit unions in general if larger credit unions grew faster than smaller ones they tended to do so for specific reasons because their charters were less restrictive because they were more efficient or because they had a financial structure that was more conducive to growth therefore credit union growth was not random but highly systematic

the diversification and financial performance of us credit unions abstract for us credit unions revenue from non interest sources has increased significantly in recent years we investigate the impact of revenue diversification on financial performance for the period 1993 2004 the impact of a change in strategy that alters the share of non interest income is decomposed into a direct exposure effect reflecting the difference between interest and non interest bearing activities and an indirect exposure effect which reflects the effect of the institution s own degree of diversification on both risk adjusted and unadjusted returns measures a positive direct exposure effect is outweighed by a negative indirect exposure effect for all but the largest credit unions this may imply that similar diversification strategies are not appropriate for large and small credit unions small credit unions should eschew diversification and continue to operate as simple savings and loan institutions while large credit unions should be encouraged to exploit new product opportunities around their core expertise

malmquist indices of productivity growth during the deregulation of norwegian banking 1980 89 productivity growth during the deregulation of the norwegian banking industry is studied within the framework of data envelopment analysis which explicitly allows for multiple outputs introducing malmquist indices for productivity growth total growth can be decomposed into frontier growth and change in each bank s distance to the frontier both the total growth index and its components can be consistently chained over time we find productivity regress at the average bank prior to the deregulation but rapid growth when deregulation took place deregulation also led to less dispersion of productivity levels within the industry

economies of diversification in the us credit union sector summary significant scale economies have been recently cited to rationalize a dramatic growth in the us retail credit union sector over the past few decades in this paper we explore another plausible supply side explanation for the growth of the industry namely economies of diversification we focus on the fact that credit unions differ among themselves in the range of financial services they offer to their members since larger credit unions tend to offer a more diversified financial service menu than credit unions of a smaller size the incentive to grow in size may be fueled not only by present scale economies but also by economies of diversification this paper provides the first robust estimates of such economies of diversification for the credit union sector we estimate a flexible semiparametric smooth coefficient quantile panel data model with correlated effects that is capable of accommodating a four way heterogeneity among credit unions our results indicate the presence of non negligible economies of diversification in the industry we find that as many as 27 91 depending on the type and the cost quantile of diversified credit unions enjoy substantial economies of diversification the cost of most remaining credit unions is invariant to the scope of services we also find overwhelming evidence of increasing returns to scale in the industry

technical progress inefficiency and productivity change in u s banking 1984 1993 studies often find that on average u s commercial banks are quite inefficient and the authors find that banks became more technically inefficient between 1984 and 1993 from a new decomposition of the malmquist productivity index into changes in pure technical and scale efficiency as well as both pure technical changes and changes in scale of technology they find that much of the inefficiency increase can be attributed to the general failure of banks to adopt technological improvements made by a few banks that advanced the efficient frontier small banks experienced especially large decreases in both efficiency and productivity

a nonparametric approach for assessing productivity dynamics of large u s banks the 1980s marked an era of substantial change for the us commercial banking industry an issue of considerable interest to banking analysts and economists alike is whether the intensified competitive pressure generated by deregulation and notable financial innovations enhanced productivity to investigate the response to these changes the non parametric malmquist index is used to evaluate productivity dynamics a statistically significant productivity surge found between 1983 and 1984 is followed by productivity regress the next period post 1985 sustained productivity progress is observed for the remainder of the decade productivity movements are primarily attributable to technological changes rather than scale changes or convergence to the production frontier

the management of risk in developing country finance the commencement of the international debt cri sis is normally linked to the mexican statement of non payment in august 1982 over the seven years of the crisis the costs have been well documented cornia et al 1987 however after numerous plans and proposals little consensus has emeiged amongst creditors on the appropriate solution strat egy let alone between the creditor and debtor countries indeed the discussions following the latest debt proposals of the us treasury secretary nicholas brady have highlighted the many areas of controversy rather than provided a coherent solu tion to a better functioning financing system 1

natural disasters and labor markets abstract while it is clear that natural disasters have serious welfare consequences for affected populations less is known about how local labor markets in low income countries adjust to such large shocks combining data from the indonesia family life survey the desinventar database the u s geological survey and district level employment indicators this paper explores how a large earthquake in indonesia affected labor market outcomes in particular the evolution of wages across sectors i find that the earthquake had a positive effect on wage growth for workers who were employed in the agricultural sector at baseline i propose two mechanisms for this result a higher growth rate of the price of rice and a downward shift in the supply of workers in the agricultural sector i show that evidence mainly supports the latter labor shifted out of the agricultural sector into the construction sector raising the marginal product of labor in agriculture

robust nonparametric quantile estimation of efficiency and productivity change in u s commercial banking 1985 2004 this article uses a new nonparametric unconditional hyperbolic order quantile estimator to construct a hyperbolic version of the malmquist index unlike traditional nonparametric efficiency estimators the new estimator is both robust to data outliers and has a root n convergence rate we use this estimator to examine changes in the efficiency and productivity of u s banks between 1985 and 2004 we find that larger banks experienced larger efficiency and productivity gains than small banks consistent with the presumption that recent changes in regulation and information technology have favored larger banks

malmquist type indices in the presence of negative data an application to bank branches in this paper we develop an index and an indicator of productivity change that can be used with negative data for that purpose the range directional model rdm a particular case of the directional distance function is used for computing efficiency in the presence of negative data we use rdm efficiency measures to arrive at a malmquist type index which can reflect productivity change and we use rdm inefficiency measures to arrive at a luenberger productivity indicator and relate the two the productivity index and indicator are developed relative to a fixed meta technology and so they are referred to as a meta malmquist index and meta luenberger indicator we also address the fact that vrs technologies are used for computing the productivity index and indicator a requirement under negative data which raises issues relating to the interpretability of the index we illustrate how the meta malmquist index can be used not only for comparing the performance of a unit in two time periods but also for comparing the performance of two different units at the same or different time periods the proposed approach is then applied to a sample of bank branches where negative data were involved the paper shows how the approach yields information from a variety of perspectives on performance which management can use

energy regulation in china objective selection potential assessment and responsibility sharing by partial frontier analysis to cope with the excessive growth of energy consumption the chinese government has been trying to strengthen the energy regulation system by introducing new initiatives that aim at controlling the total amount of energy consumption a partial frontier analysis is performed in this paper to make a comparative assessment of the combinations of possible energy conservation objectives new constraints and regulation strategies according to the characteristics of the coordination of existing regulation structure and the optimality of regulation strategy four scenarios are constructed and regional responsibilities are reasonably divided by fully considering the production technology in the economy the relative importance of output objectives and the total amount controlling is compared and the impacts on the regional economy caused by the changes of regulation strategy are also evaluated for updating regulation policy

evaluating the performance of us credit unions credit unions are small cooperative not for profit institutions which distinguishes them from other financial intermediaries in this study we conduct a performance evaluation of credit unions the criteria respect the unique organizational and institutional features of credit unions without losing sight of the fact that they must compete with other financial intermediaries we use nonparametric nonstochastic techniques to measure performance and we use parametric stochastic techniques to attribute performance variation to features of credit unions and their operating environment our sample consists of two thirds of all active credit unions in 1990