Credit Unions as Cooperative Institutions: Distinctiveness, Performance and Prospects

Abstract

Credit unions are not for profit cooperative financial institutions which provide financial services to a membership defined on the basis of a common bond. In 2013, there were 56,904 credit unions across 103 countries with 207.9 million members. There is a great diversity within the credit union movement across these countries. This reflects the various economic, historic and cultural contexts within which credit unions operate. This paper traces the historical development of credit unions in different parts of the world. We investigate what sets credit unions apart from other financial services organisations, placing a particular focus on the role they play in building social capital and community relations and empowering members. We also discuss the challenges to the future development of credit unions. These include increased regulatory burdens, capital constraints, declining membership involvement, and tensions between social and economic objectives.