Abstract
Credit unions have a relatively long history, although the first modern day credit union was established in the United Kingdom (UK) in the mid-1960s (Birchall, 2013). The original purpose of credit unions was to provide banking facilities for the financially excluded and hence many credit unions can be found in economically disadvantaged areas of the UK (e.g. Northern Ireland (French and McKillop, 2014)). Founded on the principle of mutualism, membership is limited by the requirements of a ‘common bond’, meaning that members either have to live within a certain geographic area or have other common association such as an occupation or a religious grouping. The idea is that a bond would ‘strengthen the security of the union with members connected by more than financial ties’ (Wright, 2013, p. 5). While the original rules of governance for credit unions specifically debarred credit unions from lending to corporations, recent changes in legislation facilitates lifting this restriction. In theory, this is a plausible policy initiative, as increased centralization of decision-making by financial institutions has exacerbated information asymmetries between small and medium-sized enterprises (SMEs) and lenders.
| Original language | English |
|---|---|
| Title of host publication | Research Handbook on Entrepreneurial Finance |
| Editors | Javed G. Hussain, Jonathan M. Scott |
| Place of Publication | Cheltenham |
| Publisher | Edward Elgar Publishing |
| Pages | 11-26 |
| Number of pages | 16 |
| ISBN (Electronic) | 9781783478798 |
| ISBN (Print) | 9781783478781 |
| DOIs | |
| Publication status | Published - 18 Dec 2015 |
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Keywords
- credit unions
- asymmetric information
- community development
- finance of SMEs
Cite this
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SME Lending: a new role for credit unions? / Talbot, Steve; Whittam, Geoffrey; Mac an Bhaird, Ciaran.
Research Handbook on Entrepreneurial Finance. ed. / Javed G. Hussain; Jonathan M. Scott. Cheltenham : Edward Elgar Publishing , 2015. p. 11-26.Research output: Chapter in Book/Report/Conference proceeding › Chapter (peer-reviewed)
TY - CHAP
T1 - SME Lending: a new role for credit unions?
AU - Talbot, Steve
AU - Whittam, Geoffrey
AU - Mac an Bhaird, Ciaran
PY - 2015/12/18
Y1 - 2015/12/18
N2 - INTRODUCTIONCredit unions have a relatively long history, although the first modern day credit union was established in the United Kingdom (UK) in the mid-1960s (Birchall, 2013). The original purpose of credit unions was to provide banking facilities for the financially excluded and hence many credit unions can be found in economically disadvantaged areas of the UK (e.g. Northern Ireland (French and McKillop, 2014)). Founded on the principle of mutualism, membership is limited by the requirements of a ‘common bond’, meaning that members either have to live within a certain geographic area or have other common association such as an occupation or a religious grouping. The idea is that a bond would ‘strengthen the security of the union with members connected by more than financial ties’ (Wright, 2013, p. 5). While the original rules of governance for credit unions specifically debarred credit unions from lending to corporations, recent changes in legislation facilitates lifting this restriction. In theory, this is a plausible policy initiative, as increased centralization of decision-making by financial institutions has exacerbated information asymmetries between small and medium-sized enterprises (SMEs) and lenders.
AB - INTRODUCTIONCredit unions have a relatively long history, although the first modern day credit union was established in the United Kingdom (UK) in the mid-1960s (Birchall, 2013). The original purpose of credit unions was to provide banking facilities for the financially excluded and hence many credit unions can be found in economically disadvantaged areas of the UK (e.g. Northern Ireland (French and McKillop, 2014)). Founded on the principle of mutualism, membership is limited by the requirements of a ‘common bond’, meaning that members either have to live within a certain geographic area or have other common association such as an occupation or a religious grouping. The idea is that a bond would ‘strengthen the security of the union with members connected by more than financial ties’ (Wright, 2013, p. 5). While the original rules of governance for credit unions specifically debarred credit unions from lending to corporations, recent changes in legislation facilitates lifting this restriction. In theory, this is a plausible policy initiative, as increased centralization of decision-making by financial institutions has exacerbated information asymmetries between small and medium-sized enterprises (SMEs) and lenders.
KW - credit unions
KW - asymmetric information
KW - community development
KW - finance of SMEs
U2 - 10.4337/9781783478798.00008
DO - 10.4337/9781783478798.00008
M3 - Chapter (peer-reviewed)
SN - 9781783478781
SP - 11
EP - 26
BT - Research Handbook on Entrepreneurial Finance
A2 - Hussain, Javed G.
A2 - Scott, Jonathan M.
PB - Edward Elgar Publishing
CY - Cheltenham
ER -