ABSTRACT
This chapter examines whether credit unions may represent a viable or even preferable alternative to the main banking services providers that have failed spectacularly is contingent on credit unions being institutionally and legally able to perform well or better than banks. It delivers a new hypothesis about why credit unions have failed to grow significantly in the United Kingdom (UK), namely their inability to create credit during previous decades. The chapter introduces the concept and macroeconomic role of credit creation. It analyses whether credit unions have the ability to create credit in the same way as banks. Credit unions are not-for-profit firms embedded in the local community and centred on the principles of solidarity, self-help and autonomy. The chapter concludes by pointing out policy implications, including opportunities and issues for the future development of credit unions, and directions for future research.
