Efficiency of Saving and Credit Cooperative Units in North Aceh, Indonesia

The purpose of this study is to measure and analyze the relative efficiency of saving and credit cooperative units in North Aceh, Indonesia. In this study, the selection of inputs and outputs to be analyzed by the Data Envelopment Analysis (DEA) was selected using the intermediation approach. The results showed that the overall saving and credit cooperative units in North Aceh, Indonesia have not operated fully efficient. This is indicated by the average of value of Malmquist Productivity Index which was still below one, but individually the study found that some cooperatives have operated efficiently, such as cooperative employee of PT Pupuk Iskandar Muda (Persero), KPN Kopebun, KPN Citra Guru, KPN Tunas and Kopbun Cut Mutia. These findings implied that more serious efforts should be made by the saving and credit cooperative units in North Aceh, Indonesia to improve the cooperative management efficiency levels by managing their capital and assets professionally. DOI: 10.15408/sjie.v5i2.3193

Based on the above background, this study empirically measures and analyzes the efficiency of saving and credit cooperative units in North Aceh, Indonesia. The reason of choosing the North Aceh as the case of the study was this region is simply one of the districts that have the highest number of cooperatives in the province of Aceh, with total of 521 cooperative units. The findings of the study are hoped to shed some lights to improve the welfare of the cooperative members in particular and society in general. Cooperatives are unique, where all members are the users of services provided by the cooperatives (Marwa and Aziakpono, 2014). For example, credit cooperatives (savings and loans) will provide full services to all members included in their cooperative association, or group they work and live together in the same neighborhood. The prospective members will be given consideration for credit and deposit back to the cooperatives after a successful attempt. It was also dismissed the issue of the application of the principles of classical economics that maximum profit motive, but rather the social purposes (Fried et al., 1993). Royer and Smith (2007) said that the cooperatives would restore the earned income to its members, or the number of patrons that will be allocated to members and can also be saved for use as a future capital. Although cooperatives are not prioritizing profits, the cooperatives need to secure positive profits or revenues, known as the SHU (Sisa Hasil Usaha) so that cooperatives could maintain its viability and enhance business capabilities. According to Wahyuning (2013), the cooperative is a company that should be able to stand alone to run its business activities to positive SHU. According to the Act No. 25 Article 45, Paragraph 1 of 1992 ´the SHU is a cooperative income earned within one year reduced the costs, depreciation, and other obligations, including in the tax year concernedµ. Income or cooperative SHU is highly dependent on two aspects, namely the financial and non-financial factors (Act No. 25, cooperative has a good financial performance, but without supported by a good nonfinancial factor, the cooperatives certainly will not be able to meet their objectives to maximize the SHU, and this in turn would lead the cooperative goes into bankruptcy.
The SHU is not maximized with regard to the efficiency of an agency or institution of the cooperative. It is true in a cooperative, SHU is greatly influenced by aspects of financial and non-financial, but the problem is that every cooperative does not have the same capacity. The findings of this study on the cooperative level of efficiency are hoped to contribute towards enhancing the SHU of saving and credit cooperatives in the North Aceh, Indonesia. Furthermore, this study would identify cooperative which is considered an efficient and feasible to serve as a benchmark for future cooperative development. Specifically, the purpose of this study is to measure and analyze the relative efficiency of saving and loan cooperatives that are considered worthy to be a cooperative effort to empower benchmark in the future in the North Aceh district.
Many studies related to the efficiency of the financial services field of cooperative institutions using DEA have been published in various countries. This rest of the study is divided into 5 Sections, where Part 1 contains the introduction, Section 2 discusses the literature review, Section 3 highlights the research method, Section 4 provides the results of research and discussion, and finally the conclusion of the study is presented in the last section of the study.

Data Collection
This study uses data from 15 saving and credit cooperative units in the North

Input and Output Selection
The selection of input and output to measure the efficiency and productivity of financial services institutions has been debatable (Sathye, 2003). There were two approaches in the literature to measure the input and output of the bank, which is called the production approach and intermediation approach (Berger and Humphrey, 1997). In the intermediation approach, the fund financial industry is seen as a mediator between savers/depositor and investor (Banker et al., 1984). Output is measured in the value of money and the total cost, including operating and interest expenses  (Sealey and Lindley, 1977). Meanwhile, in the production approach, banks are described using input purchases to produce deposits and various other categories of bank assets. But loans and deposits can be considered as output and measured in a number of accounts. The approach is to consider that only the operating costs and does not include interest expense paid on deposits when the deposits used as the output. Berger and Humphrey (1997) suggested the intermediation approach as the best option to analyze the efficiency of the bank, while the production approach is used to measure the efficiency of the EDQNV· branch. This is simply due to the bank management that aims to reduce not only the total cost and non-interest expenses, but it also involves the investment decisions. While the level of service, the number of branches only serve members to fund the placement process. Tesfamariam et al. (2013) analyzed the efficiency of the 329 saving and loan cooperatives in Ethiopia. In their study, the total cost savings have been identified as inputs, while the loans and total revenue have been identified as outputs. While Sealey and Lindley (1977) that analyzed the efficiency of credit unions incorporating labor (X 1 ), capital (X 2 ), and deposits (X 3 ) as inputs, and loans (Y 1 ) and security investments (Y 2 ) as the outputs. The two outputs are the main activities of the credit union. The loan is seen as the output of a traditional business activities and investment security is viewed as the output of other important business activities. Loans, securities, capital, and deposits are measured in billions of yen at the end of each fiscal year. Labor equals the number of full-time employees and capital is measured as the value of building assets, real estate, equipment, and payment for which construction has not been completed, and a security deposit and tangible. Deposits form a major part of the obligations of the credit cooperatives.  In the selection of the input and output to measure the efficiency of the cooperatives, this study adopted the intermediation approach. Five inputs of equity capital, foreign capital, number of members, number management and number of supervisors, and two output of the SHU and business volume were respectively selected. The selection of the SHU as output is because the main purpose of the cooperative is to maximize the SHU during the accounting year, while the selection of business volume as the other output is simply due to the SHU was obtained based on the volume of business generated by the cooperatives during the accounting year.   Signifikan Vol. 5 (2), October 2016

Table 3. Level of Efficiency Based on the Assumptions of Constant Returns to Scale (CRS) and Variable Returns to Scale (VRS)
Based on Table 3, the cooperative of Harkat Tani have values of CRS and VRS were not efficient. Furthermore, the cooperative of Citra Guru was slightly better efficiency compared to the CRS and VSR of the cooperative of employees Tunas. From efficiency. In other words, cooperatives need to add enough additional inputs either from their own capital or from external capital in order to produce better output to make the cooperative becoming consistently efficiency. The same is true for other cooperatives that have not shown a value of one both for the CRS and VRS.
The findings from Table 3    We could see that the value of the average level of efficiency and technical efficiency was still around less than one.  (2006) and Ludena (2010) who mentioned that the difference in the efficiency of the studied sample. López and Marcuello (2006) found that a decrease in efficiency among cooperatives in the Philippines due to the management of cooperative management is still done well in traditional sales activities as well as in the capital and asset management. While Ludena (2010)  The results of this study provide some efficiency important implications for development policy makers and managers of cooperatives. Policy makers and managers can figure out a cooperative which have been operated efficiently or not.

Productivity Credit Unions in North Aceh Wholly
Cooperatives with high efficiency and productivity levels was due to their ability to use of minimal inputs to generate optimal outputs as reflected