Meeting the credit needs of low income groups: Credit unions versus moneylenders

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dc.contributor.author Byrne, Noreen
dc.contributor.author McCarthy, Olive
dc.contributor.author Ward, Michael
dc.date.accessioned 2017-11-14T16:34:02Z
dc.date.available 2017-11-14T16:34:02Z
dc.date.issued 2005-12
dc.identifier.citation Byrne N., McCarthy O. and Ward M.(2005) Meeting the credit needs of low income groups: Credit unions versus moneylenders, Combat Poverty Agency Working Paper Series 05/05, Dublin: Combat Poverty Agency. isbn:1-90548-508-5 en
dc.identifier.startpage 1 en
dc.identifier.endpage 76 en
dc.identifier.isbn 1-90548-508-5
dc.identifier.uri http://hdl.handle.net/10468/5050
dc.description.abstract 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. en
dc.description.sponsorship Combat Poverty Agency ( Poverty Research Initiative) en
dc.format.mimetype application/pdf en
dc.language.iso en en
dc.publisher Combat Poverty Agency en
dc.relation.uri http://www.combatpoverty.ie/publications/workingpapers.htm
dc.rights © 2005 Combat Poverty Agency; The Authors en
dc.subject Credit Union movement en
dc.subject Moneylending en
dc.subject Credit Unions en
dc.subject Small-scale saving en
dc.subject Low-income groups en
dc.subject Financial inclusion en
dc.subject MABS en
dc.subject Financial autonomy en
dc.title Meeting the credit needs of low income groups: Credit unions versus moneylenders en
dc.type Report en
dc.internal.authorcontactother Olive McCarthy, Food Business & Development, University College Cork, Cork, Ireland. +353-21-490-3000 Email: o.mccarthy@ucc.ie en
dc.internal.availability Full text available en
dc.date.updated 2017-11-14T16:24:37Z
dc.description.version Published Version en
dc.internal.rssid 73313219
dc.contributor.funder Combat Poverty Agency en
dc.description.status Not peer reviewed en
dc.identifier.journaltitle Meeting the credit needs of low income groups: Credit unions versus moneylenders, en
dc.internal.copyrightchecked No !!CORA!! en
dc.internal.licenseacceptance Yes en
dc.internal.placepublication Dublin en
dc.internal.IRISemailaddress o.mccarthy@ucc.ie en


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