Since launch in 2017, Swoboda Research Centre has published over thirty papers and reports from events, so we thought it would be interesting to refresh our memories on papers in our archive from time-to-time.

A year ago, we published a compelling argument by Ismail Ertürk, of the Alliance Manchester Business School, on the detriments the contemporary financial system imposes against credit unions. When he drafted his economic commentary he was seeing a sustained period of low base rates; he worried that if this persevered credit unions would continue to suffer from limitations on returns from liquid deposits. Ismail predicted that “given institutional and government indebtedness, central bank interest rates will remain low in at the medium term, so credit unions should expect continued limitations on returns from liquid deposits.” However, since the middle of last year, the approaches to interest rates have changed from the ECB and the Bank of England (particularly dramatically), so the future may look a little different, at least the short term.

More broadly in his paper, Ismail outlined how the global economy, since the Great Financial Crisis of 2007 and with additional pressure from the COVID-19 pandemic, has been permanently altered by the way that policymakers and regulators assess the financial system. In his in-depth analysis into the ongoing threats credit unions face as socially useful, community-based financial institutions, he divided the challenge into three specific areas.

  1. Opening with central bank interventions, he explained how quantitative easing policies coinciding with ultra-low interest are undermining the business model of credit unions. These practices by big banks are eroding net interest income and capital formation. (Perhaps there will be some relief here given the interest rate changes noted above – although this may put pressure on credit union divided generation.)
  2. Ismail goes on to demonstrate that the “one-size-fits-all” framework simply doesn’t serve financial institutions that value society’s need for credit. The credit unions are stuck following many of the same rules and regulations as large banks even though they provide very different services.
  3. Ismail concludes his argument with the introduction of Fintech into the competitive market of banking. The tech-start ups and challenger banks have become a fierce adversary to credit unions in their digital abilities and efficient member acquisition.

His paper is remains a fascinating read, presenting considerable food for thought for credit unions – and stakeholders. Re-read it here to engage with the debate.