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

The survival of small financial institutions in the third millennium depends on their competitiveness against large bank rivals. Accordingly, credit unions in Australia and the United States have attempted to increase efficiency through mergers. Our paper uses the data envelopment analysis methodology to evaluate the post-merger gains in technical and scale efficiency achieved by 31 Australian credit union mergers in 1993/1994 and 1994/1995, relative 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 efficiency superior to those achieved by internal growth.