Financial efficiency of the Brazilian agricultural credit unions between 2012-2019

Abstract

The agricultural credit unions are important institutions in the supply of credit and financial services for Brazilian agribusiness. Despite the importance of this subject, few studies proposed to investigate their economic performance. Therefore, the current research proposes to analyze the financial efficiency of Agricultural Credit Unions in Brazil, focusing the analysis to examine if issues as competition and regional development can influence their financial efficiency. For that, we apply the non-parametric linear programming model of Data Envelopment Analysis (DEA) with variable returns of scale (VRS) and output oriented, considering the period from 2012 to 2019. Results point out that more than 62% of the agricultural credit unions are financially efficient over the period. In addition, the number of efficient DMUs have been increasing, especially from 2017. Considering the regional aspects, South region has the most expressive number of agricultural credit unions efficiency, no matter their scale. In the Northeast (Southeast), the efficiently credit unions are mainly those with micro (large) operation range. Even more, it seems that the efficiently institutions are predominantly around areas with large competition and where agribusiness is well developed and traditionally established.