Centre for Co-operative Studies - Reports

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Meeting the credit needs of low income groups: Credit unions versus moneylenders
(Combat Poverty Agency, 2005-12) Byrne, Noreen; McCarthy, Olive; Ward, Michael; Combat Poverty Agency
Although Ireland has a very well established credit union movement, moneylending continues to thrive. The purpose of this study is to estimate the extent of moneylending in a number of communities in Munster and to examine the extent to which credit unions contribute to financial inclusion. The study puts particular focus on comparing the service offered by the credit union with that of the moneylender. We estimated the extent of moneylending through a survey method and we examined the credit union service through interviews with credit union and MABS officers. We also compared the credit union service with that of the moneylenders. We interviewed a number of representatives from two of the main moneylending companies. We found that more than half (65 per cent) of those who are currently borrowing from moneylenders are also currently borrowing from other sources. Thus, it could be said that many of the people borrowing from moneylenders are not financially excluded. The financial exclusion literature tends to focus primarily on issues of ‘access’. However, as we found, more than half of the people currently borrowing from moneylenders do not have ‘access’ problems. So, why are they borrowing from moneylenders, if they have other options? We are of the view that for a significant number in Ireland, it is an issue of ‘use’ rather than ‘access’. Quinn and Ní Ghabhann’s (2004:26) study would support this, where 66 per cent of Travellers who were not credit union members cited ‘use’ factors such as ‘inability to save’ and ‘general lack of interest’ as reasons for not joining the credit union. Quinn and Ní Ghabhann indicated that many of the Travellers in their study were borrowing from legal and illegal moneylenders. While credit unions would appear to be very accessible, we highlight that they need to continue to offer small loans, promote small-scale saving and develop EFT (electronic funds transfer) services. We also highlight the need for credit unions to develop an emergency loan service, which members could access easily and quickly. In terms of ‘use’ of financial services, we highlight that credit unions must greatly improve on marketing and on the financial education of members, with particular focus on low-income groups. Financial advice and education in credit unions are of an ad-hoc nature and may only be available to those who have become indebted. One of the key principles of credit union philosophy is member education. Thus, in line with their philosophy and in their own interests and those of their members, credit unions should be more proactive in terms of providing financial education to their members and, in turn, building the members’ financial autonomy. In Ireland, we are very privileged to have a well-established and coherent money advice infrastructure in the form of MABS. MABS is currently developing a community education function, and thus will not only provide financial education to those who are indebted but will also be performing a preventative education role. From our research, we are led to believe that the increasing business of the moneylender is directly related to the decreasing financial autonomy of people. However, it would seem that for people on a low income, building financial autonomy can be very difficult. Additionally, our research would indicate that credit unions and MABS alone cannot build the financial autonomy of low-income groups and that this is a wider societal issue which requires a broad response.
The potential impact of credit unions on members' financial capability: An exploratory study
(Combat Poverty Agency, 2010-10) Byrne, Noreen; Power, Carol; McCarthy, Olive; Ward, Michael; Combat Poverty Agency; Combat Poverty Agency
This study evaluates the role of credit unions in building financial capability among members. The research found that most credit unions are engaged in some form of financial education in the community, although some are restricted to what could be described as low-commitment activities. A few individual credit unions and, to a lesser extent, networks of credit unions, have pioneered innovative schemes targeted at members of the community who are financially vulnerable due to low levels of financial capability. In a two-phase survey of new members, most individuals did not report that the credit union had a significant impact on their financial behaviour; however, they did highlight some key features of credit union business practice which help them to manage their finances. Finally, we argue that credit unions need to remain cognisant of their original goal of ensuring financial inclusion for all, particularly in the context of economic recession, which is likely to stimulate demand for financial capability-enhancing measures. However, it must be remembered that credit unions are only one element in any financial capability strategy for society and other players such as MABS, Government, regulators, banks and the educational system must also play their roles. It should also be remembered that financial capability is only one strategy, albeit an important one, to tackle the broader problem of financial exclusion. Other approaches must include regulation of the banking sector, the whole issue of income adequacy, and the removal of barriers to access for true participation in financial services starting with the development of basic bank accounts. Hence, any discussion of financial capability should sit within this broader context.
Cork MABS study: Clients' experiences, opinions and satisfaction levels
(Money Advice and Budgeting Service (MABS), 2014-02) McCarthy, Olive; Lane, Caoilfhionn; Byrne, Noreen
This study evaluates the Cork MABS service in terms of client satisfaction. The research found that there is an exceptionally high level of satisfaction with the MABS service among its clients. Cork MABS is seen by its clients as a highly professional and caring service. A large number of clients cited the peace of mind and the reassuring nature of the money advice process for them. It was found that there is a significant relationship between the perceived overall outcome in terms of clients’ ability to manage their financial affairs in a better way and their level of satisfaction with the service. Clients value the longer-term impacts as well as the more immediate money advice service. Some issues raised by clients were the need for more information on benefits and allowances and greater support in negotiating with creditors. For a small number of clients, particularly in the older age category, there were continuing uncertainties about the confidentiality of the service. There was some frustration about the length of time that clients had to wait for their first appointment with a money advisor. A significant relationship was found between waiting times and clients’ overall levels of satisfaction with the MABS service. The study makes a number of recommendations, most of which hinge on maintaining the current high level of support for MABS clients. Without this support, it is likely that satisfaction levels will begin to fall, and clients will suffer. The ethos of Cork MABS from the start has been about self-help and it continues to promote self-help over dependency among its clients. This in turn works to improve the financial capability of clients in the longer run which has wider societal benefits.
Interest rate restrictions on credit for low income borrowers
(University College Cork, Centre for Co-operative Studies, 2017-12) Faherty, Mary; McCarthy, Olive; Byrne, Noreen; Social Finance Foundation, Ireland; Central Bank, Ireland
The aim of this report is to examine the extent and variety of interest rate restrictions within the EU and further afield with a view to assessing the appropriateness of introducing such a restriction in the Irish market given its specific circumstances and financial environment. Moneylending is a form of lending which is legislated for and is subject to authorisation and regulation within the boundaries of the relevant legislative provisions. All licensed moneylenders in Ireland are currently subject to a restriction on their maximum APR and total cost of credit. They are currently licensed to charge up to 188.45% excluding collection charges and up to 287.72% including collection charges. It is important to note the distinction between interest rates and annual percentage rates (APRs). The latter shows the true cost of the loan as it includes both the interest and any fees and charges. It is important to note also that the shorter the term of the loan the higher the APR. Convenience and ease of access are often cited as the reasons why consumers engage with moneylenders, despite the high cost of moneylending credit. However, while it is convenient for the individual, there is a higher than necessary cost for the individual, their family and the wider community. The overall remit of policy, legislation and regulation should be to widen existing alternatives such as credit unions and the Personal Microcredit Scheme. It is in this context that the appropriateness of continuing a legislative provision that, from a customer viewpoint, allows extremely high interest rates and charges to be levied on those who can least afford to pay them can now be questioned. It is acknowledged that the success of any legislative change requires an accompanying infrastructure that will serve as the mainstream alternative to the moneylending sources of credit. The overall remit of policy, legislation and regulation should be to encourage and support existing alternatives, such as credit unions, which are currently the only and practical alternative.
Go Co-op: recent cases of Irish co-operative start-ups
(University College Cork, Centre for Co-operative Studies, 2018-09) Moroney, Aisling; Carroll, Bridget; McCarthy, Olive
This project aims to raise awareness of the role of co-operatives in Ireland and the practicalities involved in their establishment. This is achieved by means of detailing five case studies of new/emerging co-operatives. The focus of the case studies is on the motivations and experiences of these new co-operatives including factors facilitating and/or hindering their development. Cases cover a range of geographical locations, both urban and rural and a range of sectors from agri-food to retailing to environmental sustainability. It is hoped that the cases will be of benefit to: Individuals/groups wishing to establish a co-operative, whether in terms of inspiration or by way of practical example; Educators and researchers in need of relevant case studies to demonstrate the roles and practicalities as well as policy issues pertaining to co-operative development; Representative/apex bodies involved in the establishment and development of co-operatives. The co-operatives featured are: Aran Islands Energy; Co-operative/ Comharchumann Fuinnimh Oileáin Árann Teoranta; Donegal Woodland; Owners Co-operative: Ring of Kerry Quality; Lamb Co-operative; Courtmacsherry; Community Shop; Third Space Co-operative.
Credit union social impact measurement and reporting: Realising the potential
(Centre for Community Finance Europe, in collaboration with Liverpool John Moores University, 2020-11) McCarthy, Olive
Financial inclusion among social housing tenants
(Cluid Housing and the Housing Finance Agency, 2021-06) McCarthy, Olive; Faherty, Mary; Byrne, Noreen; Carton, Fergal; Clúid Housing, Ireland; Housing Finance Agency, Ireland; University College Cork
This research report examines access to and use of mainstream and alternative financial services by social housing residents in Ireland, with a focus on savings and credit.
Men's sheds and the Sustainable Development Goals: Local responses to global challenges
(Centre for Co-operative Studies, University College Cork, 2022-12) Power, Carol; O'Callaghan, Alannah; Kenny, Michelle; O'Connor, Ray; Irish Research Council

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