Finance in an Age of Austerity
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Finance in an Age of Austerity The Power of Customer-owned Banks

The Power of Customer-owned Banks

Johnston Birchall

This is a book in search of an alternative to the discredited investor-owned banks that have brought the rich countries into crisis and the world economy into a long period of austerity. It finds customer-owned banks – credit unions, co-operative banks, building societies – have hardly been affected by the crisis and continue to operate according to their organisational DNA: low-risk, close to the customer, underpinned by real savings, and still lending to SMEs to protect jobs and local economies. They are big business – in some countries with over 40% of the market – but networked in smaller, democratic societies whose origins go back to 1850s Germany.
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Chapter 7: The comparative advantages of customer-owned banks

Johnston Birchall

Extract

So far we have recounted the history of customer-owned banks and reviewed the evidence concerning their performance before, during and after the banking crisis. At various points we have noted that they have comparative advantages and – sometimes – disadvantages, when compared to other kinds of bank. In this chapter we provide a more systematic understanding of the advantages and disadvantages, using an analytical framework provided in the author’s previous work on member-owned businesses (Birchall, 2010, 2012d).

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