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SME lending: a new role for credit unions?

In: Research Handbook on Entrepreneurial Finance

Author

Listed:
  • Steve Talbot
  • Ciarán Mac an Bhaird
  • Geoff Whittam

Abstract

Legislative change introduced in 2012 facilitates lending to the small firm sector by credit unions in the United Kingdom (UK). Policymakers introduced this supply side measure partly to alleviate the dual effects of a credit crunch and recessionary trading environment for small firms. As community based organizations with detailed local knowledge, credit unions are ideally positioned to overcome the greatest barrier to small firm lending, information asymmetries. The legislative change also provides credit unions with an opportunity to overcome impending problems of low profits and declining loan to assets ratios. Credit unions have been slow to embrace this new role, as lending to small firms is negligible. In this chapter, we seek to ascertain why credit unions are not lending to small firms by interviewing chief executive officers of four of the largest credit unions in the UK.

Suggested Citation

  • Steve Talbot & Ciarán Mac an Bhaird & Geoff Whittam, 2015. "SME lending: a new role for credit unions?," Chapters, in: Javed Ghulam Hussain & Jonathan M. Scott (ed.), Research Handbook on Entrepreneurial Finance, chapter 2, pages 11-26, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:15962_2
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