Credit union

"Caisse pop" and "SACCO" redirect here. For Caisse populaire Desjardins, the Quebec credit union, see Desjardins Group. For other uses, see Sacco (disambiguation).
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A branch of the Coastal Federal Credit Union in Raleigh, North Carolina

A credit union is a member-owned nonprofit cooperative financial institution. They may offer financial services equivalent to those of commercial banks, such as share accounts (savings accounts), share draft accounts (cheque accounts), credit cards, credit, share term certificates (certificates of deposit), and online banking. Normally, only a member of a credit union may deposit or borrow money.[1][2] In several African countries, credit unions are commonly referred to as SACCOs (savings and credit co-operatives).[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 375 million, with over 100 million members having been added since 2016.[5]

Leading up to the financial crisis of 2007–2008, in 2006, 23.6% of mortgages from commercial banks were subprime, compared to only 3.6% of those from credit unions, and banks 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% more likely to be satisfied by 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. ^ "Credit Unions Globally".
  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. 13 (2). Oxford University Press (OUP): 494–538. 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 - SBA.gov". www.sba.gov. Archived from the original on 2019-08-28. Retrieved 2018-11-29.
  8. ^ "Credit Unions Twice as Trusted as Big Banks". Archived from the original on 2018-11-29. Retrieved 2018-11-29.
  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).