An application of DEA to measure branch cross selling efficiency

In this paper we analyze the operating efficiency of a group of university-affiliated credit unions in 1990. We use free disposal hull (FDH) techniques, which generalize data envelopment analysis (DEA) techniques by dispensing with the convexity assumption imposed in DEA, to measure the operating efficiency of university-affiliated credit unions and to compare their efficiency with that of credit unions not affiliated with a university. The purpose of the analysis is to test the hypothesis that university-affiliated credit unions, by virtue of the superior educational attainment of their members, some of whom sit on boards of directors that monitor managements, are thereby better managed and so perform better. In the second stage of the analysis we use seemingly unrelated regression (SUR) techniques to identify exogenous factors that might explain variation in operating efficiency among the university-affiliated credit unions.