Credit unions are often smaller than banks and they typically offer fewer services than traditional banks....

Credit unions are often smaller than banks and they typically offer fewer services than traditional banks. Did the recession of 2008 affect credit unions differently than traditional banks?

Expert Solution

Answer: Credit Unions- A credit union is a financial intermediary that provides traditional banking services, these are smaller in size than banks. These are created, owned and operated by the members. They are not for profit organizations, their status is tax exempt.

Recession of 2008-09 started with the subprime crisis in USA and it hit the whole world. Many banks were affected by the financial crisis, many financial institutions went bankrupt, Lehman Brothers , one of the leading banks in USA, went bankrupt. Merrill Lynch was taken over by Bank of America.

Impact on Credit Unions- Credit unions were not affected much as compare to other traditional commercial banks. In 2008, Banks were affected by three to five times more than Credit unions (.60% and .26% respectively). Credit unions did not lose their capital in the proportion as banks did.

From 2008 till now (before COVID 19), credit unions keep a steady growth.

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