Banking for the People: Community Banks and Their Role in Wealth Distribution

Kevin Cox
2 min readDec 1, 2023

In Australia, Community Banks are owned by their staff, depositors and borrowers, not shareholders. The banks aim to provide their communities with permanent, lower-cost ongoing banking services. This contrasts with the objective of shareholder banks to provide profits to their shareholders.

Community Banks are the natural partners for communities that operate Permanent Local Product and Services Markets. Such markets are Permanent Local Electricity Markets and Permanent Local Housing Markets. Permanent Local Markets are distinguished by buyers and sellers sharing profits rather than the sellers keeping all the profits for shareholders.

Community Banks can reduce the cost of loans by sharing loan profits with Permanent Local Markets. Sharing loan profits does not reduce Bank profits. Instead, it reduces the borrower's time to pay off the loan. The banks collect the same profit from the loan while it is outstanding, but the profit is taken for less time, as explained in the article on efficient loans.

Outcomes from Permanent Local Markets

Today, the wealth of the richest continues to grow while more people from economically marginalised communities are left behind. Every six months, the wealthiest 10% of Australians gain more wealth than the total wealth of the poorest 10%. This leads to decreased economic productivity as the velocity of money slows, and productive investments become less frequent. With the Reserve Bank increasing the cost of money, housing and wages become more expensive, and inflation rises accordingly. Additionally, volatile weather patterns lead to lower productivity and increased costs, further exacerbating many economic challenges.

Permanent local markets address all these problems as they reduce costs by increasing productivity. Consumers share the profits from increased productivity and acquire wealth when they pay for goods and services. This spreads wealth, particularly in marginalised communities with few opportunities to increase wealth. Inflation will drop as prices drop for the same goods and services. Importantly, communities can address the issues arising from global heating without waiting for governments and corporations to change.

Offering affordable loans to permanent local markets can help local businesses and communities compete with large corporations often funded by private equity. Community banks can provide shared profit loans to organizations that distribute profits to consumers, spreading the approach throughout any community. This will cause the economy to shift from a consumption-driven economy to a productive circular or degrowth economy.



Kevin Cox

Kevin works on empowering individuals within local communities to rid the economy of unearned income.