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Measurement of Economies of Scale in Victorian Credit Unions
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Rayna Brown and Ian O'Connor
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Abstract
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This study on economies of scale in credit unions differs from the only previous Australian study in three important ways: (a) the cost function is derived from the translog production function; (b) estimates of economies of scale are made for four cross-sectional periods, not one; and (c) the total sample of credit unions is divided into subsamples by asset size and bond of association type. Significant diseconomies of scale are found for some subsamples of small credit unions but for most subsamples the null hypothesis of constant returns to scale is not rejected.
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Keywords
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CREDIT UNTIONS; ECONOMIES OF SCALE; TRANSLOG.
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Contact Details
Rayna Brown
Senior Author
Department of Accountancy and Law
Victoria University of Technology (Footscray Campus)
PO Box 14428 MCMC
Melbourne VIC 8001
Ian O'Connor
Syme Department of Banking and Finance
Monash University
Caulfield VIC 3145
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We are grateful to the following people for helpful advice and comments: Kaludura Abayasiri-Silva, Kathy Avram, Tim Brailsford, Rob Brown, Kevin Davis, Robert Faff, Megan Hand, Christine Martini, Patricia McBride, Tony Saunders, Judy Taylor and seminar participants at Monash University and the First Annual Conference of the Asia Pacific Finance Assocation. We also wish to thank two anonymous referees for their comments but of course, any errors are ours. We also thank VicFIC for providing the raw data.
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