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

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 researc...

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Bibliographic Details
Published in:Social indicators research 2017-03, Vol.131 (2), p.607-629
Main Authors: Martínez-Campillo, Almudena, Fernández-Santos, Yolanda
Format: Article
Language:English
Subjects:
Banking
Bias
Competition
Cooperatives
Credit
Credit unions
Data analysis
Data envelopment analysis
Developed Nations
Efficiency
Evidence
Human Geography
Linear programming
Microeconomics
Public Health
Quality of Life Research
Regression analysis
Social Change
Social goals
Social research
Social Sciences
Sociology
Spain
Studies
Urban areas
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Summary: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.
ISSN:0303-8300
1573-0921
DOI:10.1007/s11205-016-1277-6