I want to offer a perspective based on some empirical research that Charles Nelson and I published in the Journal of Monetary  1  See figure below. 2  Congressional Budget Office, “A Summary of Alternative Methods for Estimating Potential GDP,” Background Paper, March 2004, p. 1.
As Mohammed Younis from Bangladesh, the man who dreamed up microcredit realised, social sanction can be the most powerful incentive to pay what you owe. It follows that cooperative institutions such as credit unions will have a better track record than banks, so long as they are tolerably well run.