The potential impact of credit unions on members' financial capability: An exploratory study

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Byrne, Noreen
Power, Carol
McCarthy, Olive
Ward, Michael
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Combat Poverty Agency
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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.
Credit Unions , Financial capability , Financial education , Financial exclusion
Byrne, N. Power, C., McCarthy, O., Ward M. (2010) The Potential Impact of Credit Unions on Members' Financial Capability: An Exploratory Study, Combat Poverty Agency Working Paper Series 10/08, Dublin: Combat Poverty Agency. isbn:978-1-908109-00-2
© 2010 Combat Poverty Agency; The Authors