History Of Credit Unions

History of Credit Unions

by

aardis

Credit unions have been around for over 150 years beginning in Germany. These financial institutions focused on individuals who were part of under-served communities such as those of lower income class and rural inhabitants. The original concept for these financial institutions began to become more established throughout Europe by the end of the 19th century. As sources of micro-finance, credit unions allowed cooperative successes in industries such as retail and agriculture. In Japan, a similar type of institution was created based upon cooperative initiatives that support agrarian life. These companies allowed farmers and other users to borrow fund interest free for a number of days. The trade off was that each member of the union would bear the burden and consequences of defaults.

Historic influences of cooperative initiatives are reflected on modern practices. A noteworthy theme is the idea of cooperative endeavors where members avail themselves to benefits, while also keeping certain responsibilities. Other names for these types of financial institutions such as “cooperative bank,” and “people’s banks'” also reflect this idea of shared enjoyment and shared burden. Key to the early German development of these enterprises is the concept of co-operative identity with emphasis on values of self-help, self-responsibility, democracy, and equality. In historical European rural areas, credit unions served a diverse group of underprivileged individuals such as storekeepers, artisans, and traders. In 19th century Germany, many of the patrons and members were actually freed serfs who had less and unpredictable income. Many of the members also had strong Christian values in honesty and integrity.

In early 20th century America, cooperative initiatives were introduced by French immigrants. However, unlike the institutions in Europe, American institutions were created by the employer and operated like a bond of association. Modern credit unions are member-owned financial cooperatives which are controlled by its members. The purpose of these cooperatives is to provide competitive lending at market rates and other financial services. These entities often provide a wide range of services including savings, lending, and insurance. Some of these institutions focus on supporting community development such as the building of a public playground. They also can support international development such as building schools. The size of these modern institutions varies greatly and can consist of a handful of members to thousands of members and billions of dollars in assets.

One important point that is true of historic and modern credit unions is that they greatly differ from banks. Members generally view themselves as more community-oriented and less focused on profit. These sentiments are also reflected on surveys of consumer satisfaction. For both tax and legal purposes, these institutions are considered to be non-profit which allows them to provide more competitive products than banks. However, there is also a law, which limits the selection of membership.

On a global scale, these financial cooperatives are still wildly popular today. Some of the countries with the highest percentage of members include Ireland, Barbados, and Belize. So the next time you are choosing between one of these organizations and a standard bank, you should consider all of the ideology and motivations that drove the first institutions.

There are several

credit unions grand rapids mi

residents can choose from. Click here for more information:

communitywestcu.org

.

Article Source:

History of Credit Unions