Credit Unions in Great Britain: Recent Trends and Current Prospects

Against the current backdrop of deteriorating economic and financial conditions we consider recent trends and current prospects for credit unions in Great Britain. We note that although credit unions have experienced solid membership and asset growth there are clouds on the horizon. Bad debts and loan arrears are on the rise and may be linked to recent legislative amendments and the increasing use by Government of credit unions as a mechanism to achieve its financial inclusion goals. Whatever the reason, the deterioration in the loan book needs to be quickly addressed, or it will ultimately result in either more government bailouts or a stream of failing credit unions.

Credit Unions: A Theoretical and Empirical Overview

In 2009 there were over 49,330 credit unions across 98 countries with more than 184 million members and approximately $1,354 billion in assets. There is a great diversity within the credit union movement across these countries. This reflects the various economic, historic and cultural contexts within which credit unions operate. This paper traces the evolution of the credit union movement. It examines credit union objectives, and considers issues relating to efficiency, technology adoption, product diversification, merger, failure and demutualization. The regulatory environment within which credit unions operate is also explored under the themes of interest rate regulation, common bond requirements, taxation, deposit insurance and capital regulation. The overview also considers demutualization and the costs and benefits to credit unions of altering their organizational form.

Property rights and competing for the affections of Demos: The Impact of the 1867 Reform Act on stock prices

The 1867 Reform Act in Britain extended the electoral franchise to the skilled but propertyless urban working classes. Using stock market data and exploiting the fact that foreign and domestic equities traded simultaneously on the London market, this paper finds that investors in British firms reacted negatively to the passage of this Act. We suggest that this finding is consistent with investors foreseeing future alterations of property rights arising from the pressure that the large newly enfranchised group would bring to bear on government policy. We also suggest that our findings appear to be more consistent with the Tory political competition explanation for the Act rather than the Whig threat-of-revolution explanation.

Unfunded pension liabilities and sponsoring firm credit risk: an international analysis of corporate bond spreads

This paper tests empirically whether pension information derived by corporate pension accounting disclosures is priced in corporate bond spreads. The model represents a hybrid of more traditional accounting ratio-based models of credit risk and structural models of bond spreads initiated by Merton (1974). The model is fitted to 5 years of data from 2002 to 2006 featuring companies from the US and Europe. The paper finds that while unfunded pension liabilities are priced in the overall sample, they are not priced as aggressively as traditional leverage. Furthermore, an extended model shows that the pension–credit risk relation is most evident in the US and Germany, where unfunded pension liabilities are priced more aggressively than traditional forms of leverage. No pension–credit risk relation is found in the other countries sampled, notably the UK, Netherlands and France.

Internet banking and Irish credit unions

The purpose of this paper is to examine IT adoption by Irish credit unions. Using probabilistic models, we explore one aspect of IT, that of internet banking technology, and assess the degree to which characteristics specific to the credit union and to its potential membership base influence adoption. Our
analysis suggests that asset size, organisational structure being a member of the Irish League of Credit Unions and the loan to asset ratio are all important credit union specific drivers of internet banking adoption. We also find that characteristics of the area from where the credit union captures its members are important. Factors such as the percentage of the population that is employed, the proportion of the population in the age bracket 35 to 44, the proportion of the population that have access to broadband and the level of familiarity with a local ATM facility are all identified as influencing the probability of adopting internet banking.

An Examination of Volunteer Motivation in Credit Unions: Informing Volunteer Resource Management

Volunteer recruitment and retention is a problem that most credit unions experience. Research suggests that knowledge of volunteer motivation can inform volunteer management strategies. This paper uses a survey approach to determine whether current volunteers in credit unions in Northern Ireland are more motivated by the actual act of volunteering, by the output from the volunteering activity (including altruism) or because the volunteering activity increases their human capital value. Altruistic reasons are found to be the most influential, with the act of volunteering also scoring highly. This knowledge should inform volunteer recruitment programmes and internal appraisal processes as management can reinforce messages that provide positive feedback to volunteers on the social benefits being achieved by the credit union. This will further motivate current volunteers, ensuring retention. When motivation was analyzed by volunteer characteristics we found that older volunteers, retired volunteers and volunteers who are less educated are more motivated in their role. There was little evidence that individuals volunteer to improve their human capital worth.

Profiling: a Strategy for Successful Volunteer Recruitment in Credit Unions

Credit unions are non-profit financial organisations that provide financial services to their members. They are located in 97 countries across the world. All credit unions are governed by a volunteer board and many are reliant on volunteers for all their labour requirements. However, recruiting volunteers is a problem. The literature on recruitment issues in volunteering in general, suggests that the not-for-profit sector looks to the private sector for guidance on recruitment policies and approaches. One such approach which is considered in this paper is ‘market segmentation’ wherein the potential volunteer body is profiled to determine if an individual is likely to volunteer and if they are, to identify the type of role they are most likely to be attracted to. Prior literature on volunteering in non-profit organisations suggests that certain types of individual (dominant individuals) are more likely to volunteer. This paper investigates whether this dominant status profile is evident amongst volunteers in credit unions in Northern Ireland (NI). The study finds that people with dominant characteristics are more likely to be attracted to volunteering to the board of directors and individuals who have less dominant traits overall should be offered more social/participative type roles. This information can be used by credit union governing boards for volunteer recruitment, retention and management purposes.