Credit Unions in Great Britain: Recent Trends and Current Prospects

Abstract

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.

Keywords: credit unions, crisis, failure, regulatory change, risk

JEL Classification: G21