laenuühistuid

Laenuühistud, often translated as credit unions or loan associations, are financial cooperatives that operate on a member-owned and democratically controlled basis. Unlike traditional banks, laenuühistud are not driven by profit maximization for external shareholders. Instead, their primary purpose is to serve the financial needs of their members. Membership is typically restricted to individuals who share a common bond, such as living in a specific geographic area, belonging to a particular profession, or being part of a common organization.

The core function of a laenuühistu is to pool the savings of its members and use these funds to provide loans to other members. This creates a mutually beneficial system where members can access credit at potentially more favorable rates and terms than they might find elsewhere. Deposits made by members are used to fund loans, and any profits generated are typically reinvested back into the cooperative through improved services, lower loan rates, or higher deposit interest rates.

Laenuühistud are generally subject to regulatory oversight to ensure their stability and the protection of member funds. Governance is democratic, with members electing a board of directors to oversee the cooperative's operations. This structure emphasizes community and mutual support, differentiating them from commercial financial institutions. They play a role in providing accessible financial services, particularly in areas or for groups that may be underserved by traditional banks.