Open accesscreativecommonsEditorial reviewed/Short paper
Published online: October 2023

The impact of the cost-of-living crisis on British credit unions and community lenders

Pål M. Vika and Andrew WallaceORCID

Vol 55 No 2, pp. 29-34


How to cite this article: Vik, P. M., & Wallace, A. (2022). The impact of the cost-of-living crisis on British credit unions and community lenders. Journal of Co- operative Studies, 55(2),


Credit unions are often hypothesised to be less vulnerable to crises than other types of businesses. This paper examines the impact of the cost-of-living crisis on the British credit union and community lender sector drawing on interviews with 25 managers and a focus group with four loan officers. This crisis is affecting businesses and households through high inflation, declining real pay, rising interest rates, and falling economic growth. The findings suggest that credit union and community lender customers are experiencing a deterioration in their finances. They save less, have more unsecured debts, are less likely to qualify for a loan, and are more likely to default on loan payments. Lenders are grappling with a tension between supporting customers affected by the crisis and preserving their own financial position. On the one hand, there is evidence of lenders providing additional support to their members, including emergency loans and hardship payments. On the other, they are mitigating the risks of deteriorating customer finances by tightening lending criteria and reducing lending to higher risk groups. The findings underline the need for future research into the long-term effects on the sector and its ability to provide finance to underserved communities.



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