IDEAS home Printed from https://ideas.repec.org/a/sae/loceco/v38y2023i5p423-442.html
   My bibliography  Save this article

The impact of COVID-19 on UK community finance institutions – Implications for local economic development

Author

Listed:
  • PÃ¥l M Vik
  • Joanna Curtis
  • Karl T Dayson

Abstract

UK community finance institutions play an important role in deprived neighbourhoods by serving households and businesses unable to access mainstream finance. This paper analyses the short-term effects of the Coronavirus pandemic on the activities and sustainability of the community finance sector by analysing longitudinal survey data for 40 providers and follow-up interviews with 25 organisations. COVID-19 resulted in an acceleration of the shift to online service delivery and temporary and permanent branch closures among community finance institutions. Further, the demand for, and volume and value of lending fell significantly during the first lockdown only recovering by the end of the summer 2020. This resulted in lower income, greater costs and lower regulatory ratios. Smaller providers in a weak financial position with more financially vulnerable customers were worst affected by the pandemic. We argue the pandemic may reduce access to finance for the financially excluded through the intensification of the shift to online services and by increasing the risk of providers serving the poorest folding or being merged with larger providers.

Suggested Citation

  • PÃ¥l M Vik & Joanna Curtis & Karl T Dayson, 2023. "The impact of COVID-19 on UK community finance institutions – Implications for local economic development," Local Economy, London South Bank University, vol. 38(5), pages 423-442, August.
    • Handle: RePEc:sae:loceco:v:38:y:2023:i:5:p:423-442
    DOI: 10.1177/02690942231208916
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/02690942231208916
    Download Restriction: no
    File URL: https://libkey.io/10.1177/02690942231208916?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. repec:bla:pmomgt:v:27:y:2007:i:1:p:37-44 is not listed on IDEAS
    2. Jamie Coen & William B. Francis & May Rostom, 2019. "The Determinants of Credit Union Failure: Insights from the United Kingdom," International Journal of Central Banking, International Journal of Central Banking, vol. 15(4), pages 207-240, October.
    3. Donal G. McKillop & Anne-Marie Ward & John O. S. Wilson, 2007. "The Development of Credit Unions and Their Role in Tackling Financial Exclusion," Public Money & Management, Taylor & Francis Journals, vol. 27(1), pages 37-44, February.
    4. Jeremy Franklin & Georgina Green & Lindsey Rice-Jones & Sarah Venables & Wukovits-Votzi Wukovits-Votzi, 2021. "Household debt and Covid," Bank of England Quarterly Bulletin, Bank of England, vol. 61(2), pages 1-1.
    5. Wenling Lu & Judith Swisher, 2020. "A comparison of bank and credit union growth around the financial crisis," American Journal of Business, Emerald Group Publishing Limited, vol. 35(1), pages 25-44, March.
    6. McKillop, Donal & French, Declan & Quinn, Barry & Sobiech, Anna L. & Wilson, John O.S., 2020. "Cooperative financial institutions: A review of the literature," International Review of Financial Analysis, Elsevier, vol. 71(C).
    7. Jonathan Cribb & Monica Costa Dias & Richard Blundell & Robert Joyce & Thomas Wernham & Tom Waters & Xiaowei Xu, 2022. "Inequality and the COVID-19 Crisis in the United Kingdom," Annual Review of Economics, Annual Reviews, vol. 14(1), pages 607-636, August.
    8. Jones, Paul A., 2008. "From tackling poverty to achieving financial inclusion--The changing role of British credit unions in low income communities," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(6), pages 2141-2154, December.
    9. Bill Lee & John Brierley, 2017. "UK Government Policy, Credit Unions, and Payday Loans," International Journal of Public Administration, Taylor & Francis Journals, vol. 40(4), pages 348-360, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Garcia, Alexandre Schwinden & Gonzaga, André Lucas Moreira, 2024. "How credit unions affect the profitability of Brazilian commercial banks?," The Quarterly Review of Economics and Finance, Elsevier, vol. 93(C), pages 190-209.
    2. Lee, Bill & Carlisle, Liam, 2024. "Interpreting an escape from an eviction trap as a social account: A Gramscian reading of a credit union’s policies in support of social housing tenants," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 98(C).
    3. Jan Myers & Molly Scott Cato & Paul A. Jones, 2012. "An ‘alternative mainstream’? The impact of financial inclusion policy on credit unions in Wales," Public Money & Management, Taylor & Francis Journals, vol. 32(6), pages 409-416, November.
    4. Donal McKillop & Anne Marie Ward & John O. S. Wilson, 2011. "Credit unions in Great Britain: recent trends and current prospects," Public Money & Management, Taylor & Francis Journals, vol. 31(1), pages 35-42, January.
    5. Saulo Cardoso Maia & Gideon Carvalho Benedicto & José Willer Prado & David Alastair Robb & Oscar Neto Almeida Bispo & Mozar José Brito, 2019. "Mapping the literature on credit unions: a bibliometric investigation grounded in Scopus and Web of Science," Scientometrics, Springer;Akadémiai Kiadó, vol. 120(3), pages 929-960, September.
    6. Modina, Michele & Pietrovito, Filomena & Gallucci, Carmen & Formisano, Vincenzo, 2023. "Predicting SMEs’ default risk: Evidence from bank-firm relationship data," The Quarterly Review of Economics and Finance, Elsevier, vol. 89(C), pages 254-268.
    7. Xu, Siyun & Bai, Xiaodong & Chen, Xia, 2025. "Corporate environmental, social, and governance performance, investor attention, and corporate development capability—An empirical examination based on moderating and threshold effects," International Review of Financial Analysis, Elsevier, vol. 102(C).
    8. Austen Sanders & Matthew Willison, 2021. "Measure for measure: evidence on the relative performance of regulatory requirements for small and large banks," Bank of England working papers 922, Bank of England.
    9. Arandarage Mayura Prasad Arandara & Shingo Takahashi, 2023. "Productivity analysis of Sri Lankan cooperative banks: input distance function approach," Asia-Pacific Journal of Regional Science, Springer, vol. 7(1), pages 93-117, March.
    10. repec:osf:osfxxx:b7zd6_v1 is not listed on IDEAS
    11. Chiara Burlina & Andrés Rodríguez-Pose, 2024. "Inequality, poverty, deprivation and the uneven spread of COVID-19 in Europe," Regional Studies, Taylor & Francis Journals, vol. 58(2), pages 263-284, February.
    12. Zhang, Huaqing & Cai, Cen & Zhang, Xiangjian & Tu, Yongqian & Zhu, Qianyu, 2024. "Relationship between business environment and regional innovation level: Examining the moderating role of digital finance," International Review of Financial Analysis, Elsevier, vol. 96(PA).
    13. Rempoutsika, Lemonia M. & Chronopoulos, Dimitris K. & Nguyen, Linh & Wilson, John O.S., 2024. "Deposit insurance and credit union earnings opacity," The British Accounting Review, Elsevier, vol. 56(6).
    14. Gómez Fernández-Aguado, Pilar & Partal Ureña, Antonio & Trigo Martínez, Eduardo, 2024. "Risk contribution to deposit insurance: Evidence from commercial and cooperative banks in the Eurozone," Economic Analysis and Policy, Elsevier, vol. 81(C), pages 341-355.
    15. Dai, Wensheng, 2025. "Belt and Road Initiative: Driving innovation in tech enterprises through global value chains," Finance Research Letters, Elsevier, vol. 74(C).
    16. Faridzah Jamaluddin & Norman Mohd Saleh & Azizah Abdullah & Mohamat Sabri Hassan & Noradiva Hamzah & Romlah Jaffar & Sarah Aziz Abdul Ghani Aziz & Zaini Embong, 2023. "Cooperative Governance and Cooperative Performance: A Systematic Literature Review," SAGE Open, , vol. 13(3), pages 21582440231, September.
    17. Chen, Si & Wang, Zanxin, 2025. "Climate change and listed agricultural companies’ risk-taking," International Review of Economics & Finance, Elsevier, vol. 99(C).
    18. Zhang, Huaqing & Zhang, Xiangjian & Tan, Haoyu & Tu, Yongqian, 2024. "Government subsidies, market competition and firms' technological innovation efficiency," International Review of Economics & Finance, Elsevier, vol. 96(PA).
    19. Sholevar, Maryam & Harris, Laurence, 2019. "Mind the gap: A discussion paper on Financial Literacy, Financial behaviour and Financial Education : Is there any Gender Gap?," OSF Preprints b7zd6, Center for Open Science.
    20. Stefano Filomeni & Michele Modina & Elena Tabacco, 2023. "Trade credit and firm investments: empirical evidence from Italian cooperative banks," Review of Quantitative Finance and Accounting, Springer, vol. 60(3), pages 1099-1141, April.
    21. Antonio Lemus & Cristian Rojas, 2019. "Credit Unions in Chile: What is their Role?," EconomiX Working Papers 2019-27, University of Paris Nanterre, EconomiX.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:loceco:v:38:y:2023:i:5:p:423-442. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: http://www.lsbu.ac.uk/index.shtml .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.