Performance of Brazilian credit unions: An analysis from PEARLS indicators

Purpose: To explain the performance of Brazilian credit unions, focusing on the institutions with the best segmentation level in the National Financial System (NFS). Originality/value: This study used a scenario not yet explored seeking to relate a homogeneous group of unions selected through the NFS segmentation framework and applying financial indexes standardized by the World Council of Credit Unions (Woccu), known as the PEARLS System, to fill, in a practical way, a gap regarding the perspective of identification of factors that impact the performance of Brazilian credit unions. Design/methodology/approach: The statistical technique of multiple linear regression was used, operationalized by the ordinary least squares (OLS) method on a balanced panel in the period from 2009 to 2018, modeled with three performance proxies and explained by the Pearls key indexes, with a sample of 81 unions. Findings: The main results showed that cooperatives have low rates of profitability and that it is necessary to increase investments in productive assets. Regarding performance, the net loan portfolio (E1) is directly and positively associated with profitability (ROA and ROE) and to the adjusted net equity growth (CPLA). However, default (A1) reflects a tendency to consume the net institutional capital (E9) and compromises the growth of these institutions. Moreover, the credit portfolio is indeed the most valuable asset and one of the most responsible factors for the performance of Brazilian credit unions.