Credit unions are membership-based cooperative financial services organizations that are run by and for their members. Historically, credit unions provided financial services for their members and encouraged community development through philanthropy and volunteering. The World Council of Credit Unions (WOCCU), the sector’s global trade association and development agency, encourages the adoption of a management model, coined “new model,” which encourages for-profit financial management practices. The “new model” approach is challenged by some practitioners and academics concerned that it will diminish the community involvement of credit unions. We explore the following research question: “Does the implementation of a management model that promotes for-profit-style financial management crowd out the community impact of credit unions?” We use a dataset extracted from 2,275 annual returns for 188 credit unions spanning 1996-2008, and find no evidence that community impact diminishes as a result of “new model” operating practices, suggesting a crowding-out effect is absent.
Bibliographical noteReference text: Amburgey, T. L., & Dacin, M. T. (1993). Evolutionary development of credit unions. Madison:
Centre for Credit Unions Research, University of Wisconsin–Madison.
Andreoni, J., & Payne, A. A. (2003). Do government grants to private charities crowd out giving
or fund-raising? American Economic Review, 93, 792-812.
Ashforth, T., & Soutar, N. (1984). Corporate objectives of credit unions in Western Australia.
International Journal of Bank Marketing, 2, 58-67.
Baker, A. (2008). Credit union regulation and the financial services authority: Less is more, but
better! International Journal of Law and Management, 50, 301-315.
Barron, D. N., West, E., & Hannon, M. T. (1994). A time to grow and a time to die: Growth and
mortality of credit unions in New York City, 1914-1990. American Journal of Sociology,
Benedikter, R. (2011). Social banking and social finance: Answers to the economic crisis.
London, England: SAGE.
Bies, A. L. (2010). Evolution of nonprofit self-regulation in Europe. Nonprofit and Voluntary
Sector Quarterly, 39, 1057-1086.
Brown, C., & Davis, K. (2009). Capital management in mutual financial institutions. Journal of
Banking & Finance, 33, 443-455.
Coady, M. (1939). Masters of their own destiny: The story of the Antigonish movement of adult
education through economic cooperation. New York, NY: Harper & Brothers Publishers.
Dart, R. (2004). Being “business-like” in a nonprofit organization: A grounded and inductive
typology. Nonprofit and Voluntary Sector Quarterly, 33, 290-310.
De Hoop, T., van Kempen, L., & Fort, R. (2012). Do cash transfers crowd out community investment
in public goods? Lessons from a field experiment on health education. Nonprofit and
Voluntary Sector Quarterly, 41, 232-256.
Dolan, D. A., & Landers, J. (2006). Gambling on an alternative revenue source: The impact of
riverboat gambling on the charitable gambling component of nonprofit finances. Nonprofit
Management & Leadership, 17(1), 5-24.
Enjolras, B. (2002). The commercialization of voluntary sport organizations in Norway.
Nonprofit and Voluntary Sector Quarterly, 31, 352-376.
Fairbairn, B., Ketilson, L., & Krebs, P. (1997). Credit unions and community economic
development. Saskatoon, Canada: Centre for the Study of Cooperatives, University of
Saskatchewan. Retrieved from http://usaskstudies.coop/pdf-files/CreditUnions.pdf
Ferguson, C., & McKillop, D. G. (1997). The strategic development of credit unions. Chichester,
UK: John Wiley.
Ferris, J. M., & Graddy, E. A. (1999). Structural changes in the hospital industry, charity care,
and the nonprofit role in healthcare. Nonprofit and Voluntary Sector Quarterly, 28, 18-31.
Downloaded from nvs.sagepub.com at University of Ulster Library on August 19, 2014
18 Nonprofit and Voluntary Sector Quarterly XX(X)
Forker, J. J., & Ward, A. M. (2012). Prudence and financial self-regulation in credit unions in
Northern Ireland. The British Accounting Review, 44, 221-234.
Frey, B. S. (1997). A constitution for knaves crowds out civic virtues. The Economic Journal,
Fuller, D. (1998). Credit union development: Financial inclusion and exclusion. Geoforum, 29,
Gneezy, U., & Rustichini, A. (2000). Pay enough or don’t pay at all. The Quarterly Journal of
Economics, 115, 791-810.
Goddard, J., McKillop, D. G., & Wilson, J. O. S. (2008). What drives the performance of
cooperative financial institutions? Evidence for U.S. credit unions. Applied Financial
Economics, 18, 879-893.
Goddard, J., & Wilson, J. O. S. (2005). US credit unions: An empirical investigation of size, age
and growth. Annals of Public and Cooperative Economics, 76, 375-406.
Goth, P., McKillop, D. G., & Ferguson, C. (2006). Building better credit unions. Joseph Rowntree
Foundation. Retrieved from http://www.jrf.org.uk/system/files/9781861348302.pdf
Govekar, M. A., Govekar, P., & Rishi, M. (2002). The effect of macroeconomic shocks on local
corporate philanthropy. Journal of Economics and Politics, 15, 15-26.
Gunningham, N., & Rees, J. (1997). Industry self-regulation. Law & Policy, 19, 393-414.
Hayton, K. (2001). The role of Scottish credit unions in tackling financial exclusion. Policy &
Politics, 29, 291-297.
Hillier, D., Hodgson, A., Stevenson-Clarke, P., & Lhaopadchan, S. (2008). Accounting window
dressing and template regulation: A case study of the Australian credit union industry.
Journal of Business Ethics, 83, 579-593.
Jones, P. A. (1999). Toward sustainable credit union development (Report of a National
Research Project). Manchester, UK: Association of British Credit Unions.
Jones, P. A. (2008). From tackling poverty to achieving financial inclusion-The changing role
of British credit unions in low income communities. The Journal of Socio-Economics, 37,
Kristensen, F., Markey, S., & Perry, S. (2010). “Our liquidity is trust, not cash”: Credit
unions and the rural social economy. Journal of Rural and Community Development,
McDonald, R. E. (2012). An investigation of innovation in nonprofit organizations: The role of
organizational mission. Nonprofit and Voluntary Sector Quarterly, 36, 256-281.
McKillop, D., Ward, A. M., & Wilson, J. O. S. (2010). The good, the bad and the ugly:
A discussion of the impact of regulatory reform on the UK credit union sector. The
Scottish Accountancy Trust for Education and Research. Retrieved from http://icas.org.
McKillop, D. G., Ward, A. M., & Wilson, J. O. S. (2007). The development of credit unions and
their role is tackling financial exclusion. Public Money & Management, 27, 37-44.
Moulton, S., & Eckerd, S. (2012). Preserving the publicness of the nonprofit sector resources,
roles, and public values. Nonprofit and Voluntary Sector Quarterly, 41, 656-685.
Northern Ireland Statistics and Research Agency. (2005). Northern Ireland multiple deprivation
measure 2005. Northern Ireland Statistics and Research Agency, Department of
Finance and Personnel. Retrieved from http://www.nisra.gov.uk/archive/deprivation/nimdm2005fullreport.
O’Connell, S. (2005). Alternatives to money lenders? Credit unions and their discontents. history
and policy: Connecting historians, policy makers and the media (Policy Paper 28).
Retrieved from http://www.historyandpolicy.org/papers/policy-paper-28.html
Downloaded from nvs.sagepub.com at University of Ulster Library on August 19, 2014
Forker et al. 19
Ryder, N. (2005). The shaping of credit union development: The identification of a typology of
factors that have contributed toward credit union growth in the United States of America,
Republic of Ireland, and Great Britain. Journal of Cooperative Studies, 38, 5-19.
Ryder, N. (2008). Credit union legislative frameworks in the United States of America and the
United Kingdom—A flexible friend or a step toward the dark side? Journal of Consumer
Policy, 31, 147-166.
Ryder, N., & Chambers, C. (2009). The credit crunch—The right time for credit unions to
strike? Legal Studies, 29, 75-98.
Smith, D. J. (1988). Credit union rate and earnings retention decisions under uncertainty and
taxation. Journal of Money, Credit and Banking, 20, 119-131.
Stanca, L., Bruni, L., & Corazzini, L. (2009). Testing theories of reciprocity: Do motivations
matter? Journal of Economic Behavior & Organization, 71, 233-245.
Taylor, R. (1971). The credit union as a cooperative institution. Review of Social Economy, 29,
Tinkelman, D., & Neely, D. G. (2011). Some econometric issues in studying nonprofit revenue
interactions using NCCS data. Nonprofit and Voluntary Sector Quarterly, 40, 751-761.
Van Puyvelde, S., Caers, R., Du Bois, C., & Jegers, M. (2012). The governance of nonprofit
organizations: Integrating agency theory with stakeholder and stewardship theories.
Nonprofit and Voluntary Sector Quarterly, 41, 431-451.
Ward, A. M., & McKillop, D. G. (2005). An investigation into the link between UK credit union
characteristics, location and their success. Annals of Public and Cooperative Economics,
Ward, A. M., & McKillop, D. G. (2010). Profiling: A strategy for successful volunteer recruitment
in credit unions. Financial Accountability & Management, 26, 367-391.
Ward, A. M., & McKillop, D. G. (2011). An examination of volunteer motivation in credit
unions: Informing volunteer resource management. Annals of Public and Cooperative
Economics, 82, 253-275.
World Council of Credit Unions. (2010). 2010 statistical report. Retrieved from http://www.
World Council of Credit Unions. (2011). Model law for credit unions. Retrieved from http://
Young, D. (2000). Alternative models of government-nonprofit sector relations: Theoretical
and international perspectives. Nonprofit and Voluntary Sector Quarterly, 29, 149-172.
- management models
- credit unions