Credit unions in Croatia: challenges ahead and far forward

Abstract

Credit unions as one of the prominent examples of mutual or cooperative societies in the financial sector share important tasks ranging from financial intermediation for different affinity groups, fostering financial inclusion and community development to social cohesion. In CEE countries, the mutual and cooperative sector in general and credit unions, as well, are less developed compared to advanced economies. This is due to historical and political reasons but also because of competitiveness in the financial sector, financial integration, regulatory requirements, low level of consumer protection and financial literacy. Low interest rate environment, digitalisation, development of the FinTech sector and demanding regulatory compliance could pose diverse effects on prospects of development of credit unions. The aim of this paper is to discuss development prospects of credit unions in Croatia from the perspective of regulatory changes, contemporary challenges in the financial sector, role in society and consumer perspective.