The funding of credit unions – where has all the money gone?

Abstract

The aim of this article is to critically assess the impact of government funding upon the growth of credit unions in the United Kingdom (UK) in light of the unprecedented level of financial support provided by the Labour government since 1997. The article begins by defining a credit union and commenting upon their importance towards the reduction of financial exclusion. The article challenges the findings of several studies that have determined that external funding has limited the development of credit unions. This is illustrated by the use of four case studies.

Keywords:

• credit unions
• financial exclusion
• credit union models of development
• government policy
• Growth Fund

Notes

1. The market penetration rate is calculated by dividing the total number of credit union members by the economically active population (see WOCCU 2007, p. 1).

2. This information can be obtained from the Community Development Financial Institutions Fund searchable award database, available from http://www.cdfifund.gov