Measuring the comparative performance of branches of a credit union for internal benchmarking

Purpose The purpose of this paper is to identify the efficiency scores of branches and districts, the sources of inefficiency for branches and projections of variables for inefficient branches. It measures the comparative performance of branches of a credit union for internal benchmarking. Design/methodology/approach The paper measures the performance of 35 branches of a credit union in the USA and suggests managerial insights. Data envelopment analysis is used for measuring the relative performance of the branches and districts of the credit union. The paper also compares performance differences among the districts using non-parametric statistical analyses. Findings Parts of the findings indicated that branches should focus on cost containment by reducing operating expenses and increasing their loan balances. In addition, districts were operated in different market conditions, which were evidenced by scale efficiency. The major contributions of the study are filling the void of benchmarking studies at a branch level in the credit union sector, suggesting a framework for internal benchmarking, and providing practical insights to managers of credit unions. The framework of this study can be applied to similar financial institutions with minor revisions. Research limitations/implications The limitation of this study is found in the use of cross-sectional data, which is mainly due to the sensitivity of information disclosure of the credit union. Practical implications The paper includes implications for the development of benchmarking studies at a branch level in the credit union sector. Originality/value This paper fulfills an identified need to study how to identify source of inefficiencies so as to further improve the efficiency of branches.