cooperative financial institution that makes low-interest personal loans to its members. It is usually composed of persons from the same occupational group or the same local community. Funds for lending come from the sale of shares to members and from the members' savings deposits. Cooperative banking originated in Germany in the middle of the 19th cent.; it was developed by Hermann Schulze-Delitzsch and later was particularly adapted to rural communities by F. W. Raiffeisen. In the United States, the Credit Union National Association (founded 1934) has been instrumental in organizing credit unions. Credit unions are important because they provide loans to blue-collar workers and small farmers, who would otherwise have difficulty securing credit at reasonable interest rates. Under provisions of the Credit Union Act of 1934, U.S. credit unions are chartered by their respective states or by the federal government.

See R. F. Bergengren, Credit Union, North America (1940); J. Dublin, Credit Unions: Theory and Practice (2d ed. 1971); J. C. Moody and G. C. Fite, The Credit Union Movement (1971).

The Columbia Encyclopedia, Sixth Edition Copyright© 2004, Columbia University Press. Licensed from Lernout & Hauspie Speech Products N.V. All rights reserved.

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