The contribution of credit unions to the national development of Barbados

Credit unions differ from commercial banks and other financial institutions since their members are the owners of the credit union and they elect board of directors in a democratic one-person-one vote system regardless of the amount of money invested in the credit union. Credit unions contribute to economic development through the wider community, mobilizing significant volumes of savings. They continue to be a major source of growth within the financial sector and therefore their macroeconomic significance has increased considerably. Credit unions have transformed the social and economic status of several members, enabling them to advance from the underprivileged class to the home owner class, by providing affordable terms and conditions for access to loans to finance a wide range of programs. This paper seeks to determine the contribution of credit unions to national development. The DOLS econometrics methodology suggests that the variables of interest that affect economic growth are government capital expenditure, real capital stock and cash of the credit union, the latter indicating that credit unions have a significantly positive effect on national development in Barbados. This conclusion is also complemented by an analysis of five PEARLS ratios which show the significant growth and viability of credit unions.