Credit union

A branch of the Coastal Federal Credit Union in Raleigh, North Carolina

A credit union, a type of financial institution similar to a commercial bank, is a member-owned nonprofit financial cooperative. Credit unions generally provide services to members similar to retail banks, including deposit accounts, provision of credit, and other financial services.[1][2] In several African countries, credit unions are commonly referred to as SACCOs (Savings and Credit Co-Operative Societies).[3]

Worldwide, credit union systems vary significantly in their total assets and average institution asset size, ranging from volunteer operations with a handful of members to institutions with hundreds of thousands of members and assets worth billions of US dollars.[4] In 2018, the number of members in credit unions worldwide was 274 million, with nearly 40 million members having been added since 2016.[5]

Leading up to the financial crisis of 2007–2008, commercial banks engaged in approximately five times more subprime lending relative to credit unions and were two and a half times more likely to fail during the crisis.[6] American credit unions more than doubled lending to small businesses between 2008 and 2016, from $30 billion to $60 billion, while lending to small businesses overall during the same period declined by around $100 billion.[7] In the US, public trust in credit unions stands at 60%, compared to 30% for big banks.[8] Furthermore, small businesses are 80% less likely to be dissatisfied with a credit union than with a big bank.[9]

"Natural-person credit unions" (also called "retail credit unions" or "consumer credit unions") serve individuals, as distinguished from "corporate credit unions", which serve other credit unions.[10][11][12]

  1. ^ Cite error: The named reference Credit Union Act 2007 was invoked but never defined (see the help page).
  2. ^ O'Sullivan, Arthur; Sheffrin, Steven M. (2003). Economics: Principles in action. Upper Saddle River, New Jersey: Prentice Hall. p. 511. ISBN 0-13-063085-3.
  3. ^ "Payments That Matter: SACCOs In Africa".
  4. ^ Cite error: The named reference cuna was invoked but never defined (see the help page).
  5. ^ "Global credit union movement surpasses 274 million members".
  6. ^ Li, Kangli; van Rijn, Jordan (9 May 2022). "Credit Union and Bank Subprime Lending in the Great Recession" (PDF). The Review of Corporate Finance Studies. Oxford University Press (OUP). doi:10.1093/rcfs/cfac020. ISSN 2046-9128.
  7. ^ "How Did Bank Lending to Small Business in the United States Fare After the Financial Crisis? - The U.S. Small Business Administration -".
  8. ^ "Credit Unions Twice as Trusted as Big Banks".
  9. ^ "LENDER SATISFACTION" (PDF). April 2017.
  10. ^ Frank J. Fabozzi & Mark B. Wickard, Credit Union Investment Management (1997), pp. 64–65.
  11. ^ Wendell Cochran, "Credit unions pay for risky behavior by a few", NBC News (December 21, 2010).
  12. ^ "Corporate System Resolution: Corporate Credit Unions: Frequently Asked Questions (FAQs)", National Credit Union Administration (September 24, 2010).

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