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The Significance of the Common Bond in Credit Unions

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The Significance of the Common Bond in Credit Unions The Significance of the Common Bond In Credit Unions Tim George Bickerstaffe Submitted in accordancewith the requirements for the degreeof PhD The University of Leeds Department of Sociology and Social Policy September2001 The candidateconfirms that the work submitted is his own and that Appropriate credit has been given where referencehas been made to the work of others Abstract Thethesis seeks to reveal and explain the nature ofthe affectiverelations encapsulatedwithin the 'commonbond' definition of historical and contemporaryexamples of credit unions. In doing so, it is argued that a credit union is best understoodas an 'electiveassociation'. The reality-congruenceof 'electiveassociation' as a distinct sociological conceptis explored,in relation to: i) the ambiguity surrounding the concept of 'community' in contemporary sociology; and ii) the concept's usefulnessin enabling researchersto accountfor different forms of elective association and, crucially, the affective motivations within them. The substantiveanalysis takes the form of 3 historical and contemporarycase studies into the formation and developmentof credit unions. Thefirst examinesthe Raiffeisencredit union movementofSouth- Western Germany in the late nineteenthcentury, the secondexplores the origins of the US credit union movement,with particular referenceto theformation of credit unionsin Manhattanftom 1914; and the third analysesthe significanceof, andprospectsfor, the commonbond among credit unionsin contemporaryEnglish society. The theoretical core of the thesis rests upon Elias's concept of afiguration and, specifically, the problem of human interdependencies and affective bonds. In arguing that credit unions are elective associations, Schmalenbach's 'Bund'concept is employed in tandem with Elias's insights and Shils's extension of the concept, and is argued to help transcend the conceptual dichotomy locked within the GemeinschaftlGesellschaft concept. In the analysis of English credit union formations and development, Bauman's 'consumer society' thesis is considered, as are Giddens's arguments concerning the bases of personal trust and the influence of 'expert systems' in 'reflexive modernity'. Lash's critique of Giddens is also examined and is argued to be largely commensurate with the general tenor ofSchmalenbach's insights. Contents Chapter 1 Introduction I .................................................................................. General Rules Principles Credit Union Operations 3 and of ................................................. An Overview Credit Unions History 6 ofBritish and their ..................................................... The Movement's Internal Associations 9 ................................................................................ Core Theoretical Approach II ................................................................................................ The Use Case-oriented Methodology 15 ofa .......................................................................... Chapter Overviews 20 ............................................................................................................. Chapter 2 The Concept Elective Association 24 of ......................................... The Long-term Development Concept 'Community . 26 of1he of ........................................... 'Community'as Myth 27 ......................................................................................................... The Different Conceptual Forms 'Community . 30 of ............................................................. The* Tinniesian Legacy 33 ....................................................................................................... An Example of the Tinniesian Legacy in Contemporary Sociology: The Debate Communitarianism 35 about ............................................................................... Communities Figurations 39 as .............................................................................................. Observations 44 ....................................................................................................................... The Concept 'Bund . 45 of ....................................................................................................... The Concept 'Bund'Applied Credit Unions 55 of to ............................................................. Contemporary Bundlich Forms 57 .......................................................................................... 'Neo-Tribes', 'Emotional Communities', Other Examples 'Emphatic Sociality . 60 and of ..................................................................... The Symbolic Construction 'Community'Boundaries 64 of ................................................... Observations 66 ....................................................................................................................... A Note 'Trust . 71 on ................................................................................................................ Conclusions ........................................................................................................................72 Chapter 3 The Raiffeisen Credit Unions South-Westem Germany 74 of ....... The Schulze-Delitzsch Model .............................................................................................78 The Raiffeisen Model ..........................................................................................................85 The Models Compared ........................................................................................................89 Observations .....................................................................................................................100 EXCURSUS.- Other Examplesof Credit Unionismin NineteenthCentury Europe 110 Credit Unionsin Austria-Hungary ............................... ...................................................................................III Cont/.. The Banche Populari 112 Credit Unions in Italy: ................................................................. The CasseRurali 119 ............................................................................................................. US Credit Unions 124 Chapter 4 The Origins and Development of ............... Populaires in Quebec 126 The Des/ardins Casses ................................................................ Edward Filene 130 ................................................................................................................. Pierre Jay 134 ........................................................................................................................ The Values North American Credit Unions 137 of Early ...................................................... City 1914-1934 142 The Formation of Credit Unions in New York ...................................... Observations 149 .................................................................................................................... 1930s 152 The Developing US Credit Union Movement of the ............................................. The Post- World War II Period 158 ........................................................................................ Chapter 5 Trust, Reflexivity and the Common Bond in Contemporary Credit Unions 164 ............................................................................................... 7he Structural Context 168 .................................................................................................... The Case English Credit Unions 174 of .................................................................................. EstablishedlOutsider Relations 176 The Common Bond and ................................................ Common Bond Trust 180 The Link Between the and ............................................................. Observations 186 .................................................................................................................... Credit Unions 'Reflexivity Losers . 190 and ............................................................................ Credit Unions in 'Consumer Society . 199 the ....................................................................... Conclusions 202 ..................................................................................................................... Regulation Credit Unions 205 Chapter 6 Expert Knowledge, and .................. 'Lifestyle Enclaves' 'Taste Communities'and 'Hermeneutic Truth . 206 , .............................. The Role Authorities in Recent Credit Union Formations 210 ofLocal ................................ Registry Societies Its Regulation Common Bond Definitions 212 The ofFriendly and of .... Credit Union Activities BeyondAccess Credit 214 Examples of to ........................................ Developments in Legislative Regulatory Environment 218 Recent the and ........................... Conclusions 221 ...................................................................................................................... Chapter 7 Conclusions 226 .............................................................................. Appendix Thesis Methodology 236 ................................................................ Bibliography 252 .............................................................................................. Chapter 1 Introduction A credit union is a uniquemember-driven, self-help financial institution. It is organizedby and comprisedof membersof
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