A study by two professors at Nova Southeastern University found that underserved households are less, not more, likely to enjoy the services of credit unions.
Credit unions are exempted from federal taxation, because they have a public policy purpose to serve underserved consumers.
The study used data from the Consumer Finance Monthly (CFM) survey. The time period of the study was 2007 thru 2013.
A question in the survey asked respondents if they have a checking or a savings account. If they answer no, then they are treated as unbanked.
The paper found that only 4.3 percent of the respondents have a credit union membership, but are also unbanked.
According to the paper, more educated and well-off households have a higher likelihood of belonging to a credit union. This finding is consistent with credit union industry research.
The authors state that it is possible small, low-income credit unions may serve the underserved; but on average, credit unions do not.
The paper states that its findings indicate that "there is room for the government to fine tune its credit union tax exemption in order to ensure that subsidies flow to the needy rather than to the generally well-off."
Read the study.
THERE IS ROOM ALRIGHT.
ReplyDeleteMost of the bigger credit unions have really sweet demographics.
its a myth that they serve the underserved.
congress is just too lazy and compromised to do anything about it.
nafcu and cuna can produce all the phony research they want that "demonstrates" how much credit unions save consumers.
the only saving going on is the federal tax savings and its because congress is bought off.
we would take the 21% tax tomorrow if it came with secondary capital, no field of membership restriction and more ability to do business lending.
we have done the math, it works fine.