Can mergers ensure the survival of credit unions in the third millennium?

The survival of small financial institutions in the third millennium depend s on their competitiveness against large bank rivals. Accordingly, credit u nions in Australia and the United States have attempted to increase efficie ncy through mergers. Our paper uses the data envelopment analysis methodolo gy to evaluate the post-merger gains in technical and scale efficiency achi eved by 31 Australian credit union mergers in 1993/1994 and 1994/1995, rela tive to non-merging credit unions. When compared with the only US study of credit union mergers [Journal of Banking & Finance 23 (1999) 367-386], our findings suggests that mergers are not associated with improvements in effi ciency superior to those achieved by internal growth. (C) 2001 Published by Elsevier Science B.V.