Corporate Governance Structures and the Comparative Advantage of Credit Unions

Kevin Amess () and Barry Howcroft

Corporate Governance: An International Review, 2001, vol. 9, issue 1, 59-65

Abstract: The paper examines the economics of the mutual organisation and the stakeholder models of corporate governance with its emphasis on informal contracts, trust and co‐operation. These concepts are important in informal governance systems such as mutuals because they economise on transaction costs and promote efficient exchange. In this respect, the paper argues that mutuals have a comparative advantage compared with joint stock banks in ameliorating problems associated with adverse selection and moral hazard. These comparative advantages, however, are enhanced in small mutuals such as credit unions which focus on relatively small memberships with a common bond. The paper concludes by suggesting that although the credit union movement will not necessarily develop along similar lines to the building societies, it does have a future in providing banking facilities to the relatively poor and disenfranchised sectors of society.

Date: 2001
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Persistent link: https://EconPapers.repec.org/RePEc:bla:corgov:v:9:y:2001:i:1:p:59-65

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