Swoboda Research Centre launches lending research project in Ireland

The research will focus on the volume, nature, and credit profile of credit union loans in Ireland

A research project has been set up to assess small-value lending in Irish credit unions.

Led by Lorraine Corcoran of Afanite and Dr Paul A. Jones of the Swoboda Research Centre, the study will also have analytical input from Declan Mooney from Credit Union Financial Analytics.

The research, funded by Irish League of Credit Unions (ILCU), will examine small-value loan products in Ireland and around the world to identify ways to improve the value from this lending to members and to the credit union.

According to Retail Banking Review, credit unions in Ireland issued almost 200,000 small-value loans (defined as loans under €2,000) in 2021. The research will focus on the volume, nature, and credit profile of these loans in Ireland, whether under standard lending practices, or through local initiatives.

With new legislation on the way for credit unions in Ireland, the research will also consider the economic implications of the potential changes to the interest rate cap which could be introduced by the Credit Union (Amendment) Bill 2022.

The study seeks to come up with a set of conclusions and recommendations on opportunities to write more small value loans and/ or promote alternative small loan offerings (such as revolving credit) that meet member needs and which are economical for the credit union, potentially using new interest rate capabilities.

ILCU CEO David Malone said: “This is the first ever detailed analysis of how these small loans perform, their contribution to credit unions, and the potential to develop this lending. The ILCU is delighted to be funding this independent research into small loans which will help to inform the development of the credit union loan offering to better meet existing and new needs.”

The project’s findings will be published in May, and presented at the Swoboda Credit Union Conference in Portlaoise on 23 May. 

The study will focus on the Republic of Ireland but, says Swoboda, “the research will have relevance for subsequent consideration in Northern Ireland”.