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The economic efficiency of the Credit Department of Farmers' Associations in Taiwan

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  • Ching-Cheng Chang
  • Tsung-Chuan Hsieh

Abstract

The efficiency performance of the Credit Department of Farmers Associations (CDFAs) in Taiwan is examined using a nonparametric programming approach. The findings show that most CDFAs are highly scale efficient, but the performance on technical and allocative efficiencies is not satisfactory. ANOVA and χ2 tests are used to examine the impact of environmental factors measured by an urbanization index, while Tobit analysis is used to identify the association between the efficiency indices and the accounting-based financial performance ratios. While some of the statistical inferences are consistent with the stated hypothesis, others are not. This implies that the increased competition created by financial deregulation could improve CDFA performance through changes in portfolio management decision making. On the other hand, the risk-efficiency trade-off should be taken into consideration by regulatory agencies to monitor the performance of the CDFAs.

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  • Ching-Cheng Chang & Tsung-Chuan Hsieh, 1998. "The economic efficiency of the Credit Department of Farmers' Associations in Taiwan," Applied Financial Economics, Taylor & Francis Journals, vol. 8(4), pages 409-418.
    • Handle: RePEc:taf:apfiec:v:8:y:1998:i:4:p:409-418
    DOI: 10.1080/096031098332943
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    References listed on IDEAS

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    1. Grabowski, Richard & Rangan, Nanda & Rezvanian, Rasoul, 1994. "The effect of deregulation on the efficiency of U.S. banking firms," Journal of Economics and Business, Elsevier, vol. 46(1), pages 39-54, February.
    2. Golany, B & Roll, Y, 1989. "An application procedure for DEA," Omega, Elsevier, vol. 17(3), pages 237-250.
    3. Murray, John D & White, Robert W, 1983. "Economies of Scale and Economies of Scope in Multiproduct Financial Institutions: A Study of British Columbia Credit Unions," Journal of Finance, American Finance Association, vol. 38(3), pages 887-902, June.
    4. Aly, Hassan Y, 1990. "Technical, Scale, and Allocative Efficiencies in U.S. Banking: An Empirical Investigation," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 211-218, May.
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    Cited by:

    1. Burmeister, Larry & Ranis, Gustav & Wang, Michael, 2001. "Group Behavior and Development: A Comparison of Farmers' Organisations in South Korea and Taiwan," Center Discussion Papers 28464, Yale University, Economic Growth Center.
    2. Larry Burmeister & Gustav Ranis & Michael Wang, 2001. "Group Behavior and Development: A Comparison of Farmers' Organisations in South Korea and Taiwan," Working Papers 828, Economic Growth Center, Yale University.

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