LEGAL PROBLEMS OF CREDIT UNIONS IN UKRAINE IN THE CONTEXT OF FINANCIAL INSTABILITY
Abstract
Problem setting. Powerful development of banking crisis caused instability of the financial system that manifested in the form of a moratorium on the deposits issuance, interruption of lending to the population and the loss of customers' confidence to the banks. Under these conditions, the activity of financial intermediaries in financial services market become more than ever relevant, including credit unions as the most represented type of non-bank financial institutions.
Analysis of recent research and publications. The problems of the functioning of certain non-bank credit institutions, including credit unions and pawnshops have been studied by leading scientists: O. Vasilik, N. Vnukova, B. Ivasiv, V. Goncharenko, V. Korneev, M. Krupka, I. Lutiy, A. Moroz, A. Peresada, M. Savluk, V. Khodakivska, V. Sheludko and others.
Article's main body. The article studied the problems of the functioning of credit unions as a form of cooperation of members united by a common purpose and common interests. The author revealed that the creation of preferred conditions for cooperative members (that are more favorable than similar proposals in the financial markets) doesn't work in practice. Trust based lending creates a basis for loans default and using of tax benefits of credit unions, as non-profit organizations, with the objective to profit illegally. The author analyzed the tax changes in the field of tax regulation of credit unions, that pointing to the tendency of destruction of credit unions as non-profit organization. However, the reform should arise from overcoming the existing problems in the organization of credit unions, not from their conversion to ordinary commercial organization.
Conclusions and prospects for the development. Resulting from the analysis of current status of credit unions in Ukraine, it should be noted the significant shortcomings both in their organization and in the level of services provided to credit unions members. Lending terms can’t be considered more favorable for the members than the offer of bank lending, a significant level of bad debt among borrowers that indicates the lack of guarantees in the return of credit and low level of control debt. Resolving of the problems in credit unions activity become possible through improving existing legislation, including amendments of the law of Ukraine "On credit unions" by the provisions concerning with additional guarantees of loans repayment by pledge of movables, establishing the procedures for the asset sales with a compulsory returning of the overflow to the debtor's property, monitoring the similar services a the financial market and formation of lending rates with the aim to create priority conditions for credit union members.
