title: Reaction and Responses of Jamaican Credit Unions to Proposed Banking Regulations Under the Bank of Jamaica.
Creators: name: Knight, David
Publisher: name: University of Liverpool Repository
Year: 2024

description: ABSTRACT
Amidst market and regulatory changes credit unions in Jamaica face new compliance issues and practice-based problems with proposed new regulations under the country’s central bank. While credit unions in Jamaica have been self-regulated for over seventy (70) years, the proposed changes are considered “a red-hot issue” for the sector with fears of adverse effects and existential threats at one extreme and strong support for modernization of regulatory framework at the other. The reactions and the responses to the proposed regulatory changes were not fully understood within the credit union sector and the purpose of this action research serves to explore and surface critical issues facing credit unions. To gain a better understanding of these proposed changes and to develop actionable knowledge, I examined the experiences of twenty -two participants selected from a purposeful sample. 
The global and regional financial crises such as the 2007/2008 US financial crisis led the banking supervisors in the G10 economies to formulate and promote prudential standards to protect and preserve savings and deposits, maintain resilience in the financial systems, and reduce the risks of market failures. These measures have manifested in stringent banking and financial standards such as capital adequacy, buffer capital, deposit insurance, risk management frameworks adopted and implemented under national financial reforms programmes. Financial Cooperatives in many countries have been brought under such prudential regulations like commercial banks. P’erilleux and Nyssens (2017) and Jones and Kalmi (2012) posit that credit unions should not be treated like banks and credit unions contend that the industry was not responsible for the market failures or contagions caused by financial engineering, unbacked expansion of credit or excessive risk taking/moral hazard. Institutions such as the International Labour Organization posit that credits unions remained relative stable, provided rescue for many communities and grew while banks collapsed or contracted during times of crisis. On the other hand, some stakeholders and policy makers posit that credit unions should be brought under modern regulatory and supervisory oversight as a part of proactive public policy risk management for national deposits and savings. Divergent views for and against the banking regulations captured my attention as a credit union director during my DBA studies and as Chairman for Options/Viability Committee of my local cooperative birthing the journey for this research thesis.
The research is built on an interpretive/qualitative platform utilizing action learning techniques to foster collaborative learning with persons connected and concerned with the research question: “Responses of Jamaican Credit Unions to Proposed Banking Regulations Under the Bank of Jamaica”. Seven (7) core themes and ten prioritized actional steps have been identified from the research as pivotal to the sustainability of the sector. The themes highlights that credit unions must promote Safety and Soundness of Members Deposits and Savings and Plan Strategically for the Resilience of the industry; the Uniqueness of Credit Unions must be preserved as distinct from banks with consistently lobby for Enabling Legislations and Regulations; credit unions must be cognizant that Disruptive Regulatory Changes affects the organization and the people which calls for effective management of Organizational Change and Transformation; Credit unions must Envision New Opportunities as key players in the national strategy for financial inclusion to serve the under-served, underbanked and unbanked promoting financial empowerment and financial education for members consistent with core cooperative principles to promote economic and social advancement. The actionable steps for Jamaican credit unions can be summarized as a three-legged stool approach. The first leg takes the strategic actions and decisions to prioritize financial inclusion, financial literacy and member empowerment. The second leg negotiate for enabling legislation and policy framework such as tier regulations and reduction of fine and fees. The third leg is to advocate for changes such as relaxation of the IFRS 9 requirements and heavy provisioning for loans and delinquencies.