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Abstract**:  The unique characteristics of credit unions reduces the information asymmetry that is prevalent in credit making decisions, enabling them to provide loans where other financial institutions cannot. This makes them a potential tool in the fight against financial exclusion. Yet, the UK credit union movement is not regarded as being successful, even though there is evidence of much financial exclusion. This study is cross sectional in form, and evaluates characteristics that may contribute to the success of the UK credit union movement at national and regional level, in 2000. The findings are used to consider the impact of recent regulatory changes on the movement. The key findings are that there is a significant relationship between the success of a credit union, its size and the deprivation of the ward from which it sources its members. More specifically, larger credit unions and those located in more affluent wards, are more successful. Affiliation to the Irish League of Credit Unions and having a common bond of occupation, are also found to be contributing factors to credit union success. These results are taken as providing support for the recent changes implemented by the Financial Services Authority (FSA), which is likely to result in the emergence of larger credit unions (through mergers), run by appropriately qualified persons, serving a more mixed‐income membership base. It is, however, noted that the history of the UK movement is one of missed opportunities and only time will tell whether credit unions have the wherewithal to accept current opportunities.

In this study we employ a distance function approach to investigate sources of productivity growth in UK building societies in the post‐deregulation period 1989–93. Productivity growth is decomposed into technical change and change in efficiency, with the latter change also being decomposed into change in pure technical efficiency, change in scale efficiency and change in input congestion. As a scale‐inefficient society may be able to obtain size efficiency gains even when the attainment of scale efficiency is impractical, we also measure the change in size efficiency over the period. The finding of substantial productivity growth was largely due to progressive shifts in technology, with the relatively small improvements in efficiency being largely due to improvements in scale efficiency. A marked increase in the attainment of size efficiency over the period was also found.