Technical Efficiency’s Nonparametric Analysis of Ecuadorian Saving and Credit Cooperatives before and during the Pandemic

Round 1

Reviewer 1 Report

The article concerns a very important economic issue which is the efficiency of financial sector entities. The importance of this topic increases in times of turbulence in the external environment, such as a pandemic or even war. The article was written well in terms of content. 

I have a few minor technical notes:

- the clarity of table 1- is too extensive and hard to read, maybe it needs to be divided into two (with Production (P) and Intermediation (I))

 - can immediately explain these variables used in the model in line 145-148, what they are expressed in

- in Table 2 (a similar note to Table 3) there are different indicators in different years; is it possible to organize it?

- is it possible to include some new literature in the bibliography, because only 3 articles are from the last three years (from 2020).

Author Response

Please see the attachment.

Author Response File: Author Response.pdf

Reviewer 2 Report

The paper respects the editing requirements and the originality and novelty of the proposed topic is according to the latest literature data. The information is clearly presented and the methodology is detailed with accuracy and by indicating the sources. The research respects the steps required to analyze the indicators by DEA method, under two approaches: intermediation and production (the input and output orientation approach). They calculate the scores under CRS and VRS assumptions, and generate correctly the technical efficiency, scale efficiency and pure technical efficiency. They succeeded to show the position of study cases on the production frontier and combined the DEA method with SPSS analyses methods to see which indicators are statistically significant under the two approaches. The results are relevant for the domain and the research can be replicated. They showed the relationship between technical efficiency and liquidity   at COACs (Savings and Credit Cooperatives) level.  The conclusion is summarizing the results and the bibliographic sources are relevant for the subject.

Author Response

Response to Reviewer 2 Comments

 

The paper respects the editing requirements and the originality and novelty of the proposed topic is according to the latest literature data. The information is clearly presented and the methodology is detailed with accuracy and by indicating the sources. The research respects the steps required to analyze the indicators by DEA method, under two approaches: intermediation and production (the input and output orientation approach). They calculate the scores under CRS and VRS assumptions, and generate correctly the technical efficiency, scale efficiency and pure technical efficiency. They succeeded to show the position of study cases on the production frontier and combined the DEA method with SPSS analyses methods to see which indicators are statistically significant under the two approaches. The results are relevant for the domain and the research can be replicated. They showed the relationship between technical efficiency and liquidity   at COACs (Savings and Credit Cooperatives) level.  The conclusion is summarizing the results and the bibliographic sources are relevant for the subject.

 

Thank you for all your comments!

Reviewer 3 Report

Thank you for inviting me to review this interested paper “Technical Efficiency's Nonparametric Analysis of Ecuadorian Saving and Credit Cooperatives Before and During the Pandemic” . After carefully review, I suggest some major revision before publication.

1. The abstract need to be revised more efficient.

2. A good article should include, (1) originality, new perspectives or insights; (2) international interest; and (3) relevance for governance, policy or practical perspectives relevant to the focus of this manuscript.

The authors need to clarify some questions: Why is the topic important (or why do you study on it)? What are research questions? What are your contributions? Why is to propose this particular method (This must come from Literature discussion)?

For this purpose, I suggest some related papers:

https://doi.org/10.3390/axioms10030131

https://doi.org/10.1016/j.ribaf.2015.09.006

https://doi.org/10.3390/math10040551

3. Your conclusions' section needs to underscore the scientific value added of your paper, and/or the applicability of your findings/results, as indicated previously. Basically, you should enhance your findings, limitations, underscore the scientific value added of your paper, and/or the applicability of your contributions/shortages and future study in this session.

Author Response

Response to Reviewer 3 Comments

 

1. The abstract need to be revised more efficient.

We propose the next abstract instead of the original:

ORIGINAL: Abstract: Ecuador’s Credit Unions play a key role inside the local economy, and the pandemic period has shown the weakness of the entities. Therefore, our main goal was the evaluation of Technical Efficiency and its factors that influenced it during the years from 2009 to 2020, which included the pandemic period. For this, the DEA model was applied with production and intermediation focus, and this was applied to 19 cooperatives. Findings reveal that level of technical efficiency was larger in the pre pandemic than the pandemic period. Efficient Credit Unions are characterized by higher profitability, low levels of liquidity and portfolio coverage, and a high rate of financial intermediation, among others through the pre-pandemic period, however, on the other hand, the debt restructuring was one the most important characteristics of non-efficient Credit Unions.

NEW: Abstract: Ecuador’s Credit Unions or COACs play a key role inside the local economy, and the pandemic period has shown the weakness of the entities. An assessment of the efficiency of the biggest COACs in the country and the different factors related to it can provide important information for policy makers and the sector in general. Therefore, our main goal was the evaluation of Technical Efficiency and its factors that influenced it during the years from 2009 to 2020, which included the pandemic period. For this, the DEA model was applied with production and intermediation focus, and this was applied to 19 COACs from the first segment of the sector. Findings reveal that level of technical efficiency was larger in the pre pandemic than the pandemic period. Efficient Credit Unions are characterized by higher profitability, low levels of liquidity and portfolio coverage, and a high rate of financial intermediation, among others through the pre-pandemic period, however, on the other hand, the debt restructuring was one the most important characteristics of non-efficient Credit Unions. The most important contribution is the possible projection of different decisions that will take the COACs to improve their role in the system given all the difficulties that the pandemic is causing around the world.

2. A good article should include, (1) originality, new perspectives or insights; (2) international interest; and (3) relevance for governance, policy or practical perspectives relevant to the focus of this manuscript.

The authors need to clarify some questions: Why is the topic important (or why do you study on it)? What are research questions? What are your contributions? Why is to propose this particular method (This must come from Literature discussion)?

For this purpose, I suggest some related papers:

https://doi.org/10.3390/axioms10030131

https://doi.org/10.1016/j.ribaf.2015.09.006

https://doi.org/10.3390/math10040551

 

Reference:

https://doi.org/10.3390/axioms10030131

 

The expansion of the cooperative and non-cooperative banking sector has an important effect on the economy as a whole [Inserted in lines 27,28]

 

Reference:

https://doi.org/10.1016/j.ribaf.2015.09.006

 

intervention policies, [inserted in line 31]

 

 

Also, we will add the next paragraph in the introduction part (method):

 

“Data Envelopment Analysis (DEA) and theTechnical Efficiency (TE) for each Decision-Making Unit (DMU) are considered powerful tools utilized for benchmarking and the performance in general. DEA uses two different orientations (towards input variables where inputs are minimized, and oriented towards the maximization of the output variables, as we will describe in the next part. https://doi.org/10.3390/math10040551 , https://doi.org/10.3390/axioms10030131. The application of the DEA model for the measurement of efficiency in Banks or Credit Unions constitutes a proposal that covers the analysis of the entity in several aspects at the same time. It allows identifying the factors that have a direct impact on the entities that present lower levels of efficiency based on the main financial indicators, and allowing them to improve their performance and reach optimal levels of operation.” 10.22004/ag.econ.312923

 

3. Your conclusions' section needs to underscore the scientific value added of your paper, and/or the applicability of your findings/results, as indicated previously. Basically, you should enhance your findings, limitations, underscore the scientific value added of your paper, and/or the applicability of your contributions/shortages and future study in this session.

We consider our conclusions are covering all the features you are describing. If you think it is necessary to change our conclusions, with respect we request the specific changes you need to do.

 

Reviewer 4 Report

The question tackled is of great interest. The context of the paper and the literature review are well presented.

1. Page 1, line 6-7: the sentence starting with “Therefore” have to be revised. Please pay attention to the portion after the “and”.
2. Page 2, line 72: There should be another paragraph, introducing the next sections of the paper.
3. Page 4, line 159: Can the authors expand about why efficient units in this paper are determined under the variable return to scale assumption (BCC DEA model). Typically, it is the CCR model (constant return to scale) that is used for benchmarking purpose.
4. Page 4, line 166: I would suggest revising the sentence at the beginning of the line.
5. Page 4, line 176-177: The comment is not consistent with the Figure 1. Scores from the intermediate approach are not at their lowest in 2020, but earlier in 2017. Please revise.
6. Page 5 & 6: Table 1 is not readable the way it is presented. I would suggest having it on a separate page that would have a landscape
7. Page 5, 6 & 7: About the content of Table 1 and figure 2, the results presented show a number of efficient units that is really high, as exhibited by the proportions in Figure 2. This is evidence of DEA models that have very low discrimination power among the units. The authors should investigate why this behaviour occurs, what it means for the validity of the scores they obtained, and discuss whether, or not, they should explore more advanced Post Hoc DEA models, such as super-efficiency DEA or DEA with weight restrictions, to obtain better efficiency scores.
8. Page 7, line 213: revise the sentence, paying attention to the expression “managerial management”
9. Page 13: the references are not in alphabetical order. Please double-check the Journal policies about references.

Please address the concerns above, and especially #7, prior to having the paper accepted.

Author Response

Please see the attachment.

Author Response File: Author Response.pdf

Round 2

Reviewer 3 Report

This paper can be accepted for publication.