Credit Union

The cooperative financial institution which has been controlled and owned by the member and operated with the main motif of providing credits at competitive rates, promoting thrift, and rendering some other financial service to the members of the institution is referred to as credit union. There are many credit unions which has got the main goal of furthering the community development and furthering the sustainable international development in a local perspective.

In accordance with the total system assets and the asset size of the average institution the credit union systems may vary significantly. It may range from volunteer operations with good number of members to a several billion dollars institutions with thousands of members and handful of assets. When compared to banks credit unions are smaller in size. For instance, in the United States of America about $93 million are in the hands of the credit union as in assets whereas the about $1.53 billion is the average asset value of the U.S banks as per the report that is taken in the year 2007.

The credit unions are defined as the “not-for-profit cooperative institutions” by the World Council of Credit Unions. Practically, the jurisdiction plays a vital role in the variation of the legal arrangements concerned with the credit unions. For example, in Canada the credit unions are mainly operated as for profit institution and there by the earnings of the credit union are mainly utilized for the growth of the credit union and the growth of the members of the credit union.

Organizational Structure:

The unusual organizational structure of the credit unions is reflected by the difference in the viewpoints of the credit unions in various places. By ensuring that the owner of the union and the users of the union are same people the principal-agent problem is attempted to solve in the structure. Whatever the case may be the credit union could never accept donations and should be competitive enough to prosper in the competitive market economy.

Names of the Credit union:

There are various names given to the credit unions in various places. In Africa, the credit unions are called savings and credit cooperative organization (SACCOs) where as in the Spanish-speaking countries; this is referred to as cooperatives de ahorro y credito while in Mexico it is called caja popular.

There are several differences between the credit unions and other financial institutions. One important difference is that the members of the credit union who have got the accounts in the credit union are mainly the owners of the credit union.

Questions:

• What is credit union?
• Who the members of the credit union?