PAIRED DIFFERENCE ANALYSIS OF SIZE ECONOMIES IN UK CREDIT UNIONS

This study utilizes a paired difference approach to investigate for th e existence of scale economies in UK credit unions. The analysis is co nducted for both credit unions in aggregate as well as a number of sub -groups with the latter defined in terms of the trade organization to which credit unions are affiliated. This decomposition was viewed as p articularly important in that the respective umbrella organizations ha ve different growth strategies. The analysis revealed that significant efficiency gains are available through credit unions adopting a polic y of asset growth. This finding held good irrespective of the umbrella organization to which credit unions belong although the analysis also revealed that the opportunity for efficiency gains was not so pronoun ced for the members of one of the trade organizations - the National F ederation of Credit Unions. This finding was due to the NFCU's much mo re overt emphasis on self-help and community development, particularly in areas of economic disadvantage.