An exciting new research project to assess small value lending in Irish credit unions has launched this month. The project will be led by Lorraine Corcoran of Afanite and Dr Paul A. Jones of Swoboda Research Centre (Swoboda), with analytical input from Declan Mooney, at Credit Union Financial Analytics, and will examine small value loan products in Ireland and around the world to identify how to improve the value from this lending to members and to the credit union. The work is being funded by the Irish League of Credit Unions (ILCU). 

Credit unions in Ireland already issue a high volume of small value loans (defined as loans under €2,000) – almost 200,000 in 2021, according to the Retail Banking Review. This project aims to create a full picture of the volume, nature, and credit profile of these loans in Ireland, whether under standard lending practices, or through local initiatives. The research will consider the economic implications of the potential changes to the interest rate cap arising from the Credit Union (Amendment) Bill 2022 as currently drafted. Offerings and strategies in other countries will be explored for relevant insights.

The findings will offer conclusions and recommendations on opportunities to write more small value loans and/ or promote alternative small loan offerings (such as revolving credit) that meet member needs and which are economic for the credit union, potentially using new interest rate capabilities. This work will focus on the Republic of Ireland, but it is expected that the research will have relevance for subsequent consideration in Northern Ireland. 

Commenting on the proposed research project, ILCU CEO David Malone said, “This is the first ever detailed analysis of how these small loans perform, their contribution to credit unions, and the potential to develop this lending. The ILCU is delighted to be funding this independent research into small loans which will help to inform the development of the credit union loan offering to better meet existing and new needs.” The project’s findings will be published in May, and presented at the Swoboda Credit Union Conference in Portlaoise on 23rd May (booking soon). 

The project welcomes feedback from credit unions: please contact Paul Jones, . 

Lead researchers