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Performance and trade-offs in Microfinance Organisations-does ownership matter?

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  • Roy Mersland

    (Agder University, Kristiansand, Norway)

  • Reidar Øystein Str�m

    (Østfold University College, 1757, Halden, Norway)

Abstract

Policy advocates argue for the transformation of non-government Microfinance Organisations (MFOs) into shareholder owned firms (SHFs). This paper investigates whether the proposed superiority of shareholder owned MFOs is empirically supported. The findings indicate that the difference between shareholder owned MFOs and non-government MFOs is minimal. Our results contradict established paradigms and policy guidelines in the industry. However, the results are not necessarily surprising since ownership theories support our findings. So do also studies from the general banking markets as well as historical studies. Adaptation of legal frameworks allowing well-performing NGOs to mobilise savings appears to be a better option than transformation. Copyright © 2008 John Wiley & Sons, Ltd.

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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Journal of International Development.

Volume (Year): 20 (2008)
Issue (Month): 5 ()
Pages: 598-612

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Handle: RePEc:wly:jintdv:v:20:y:2008:i:5:p:598-612

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Web page: http://www3.interscience.wiley.com/journal/5102/home

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  1. Desrochers, Martin & Fischer, Klaus P., 2002. "Corporate Governance and Depository Institutions Failure: the Case of an Emerging Market Economy," Cahiers de recherche, CIRPEE 0201, CIRPEE.
  2. Hartarska, Valentina M., 2005. "Governance and Performance of Microfinance Institutions in Central and Eastern Europe and the Newly Independent States," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark, European Association of Agricultural Economists 24568, European Association of Agricultural Economists.
  3. Mark Schreiner, 2002. "Aspects of outreach: a framework for discussion of the social benefits of microfinance," Journal of International Development, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 14(5), pages 591-603.
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  5. Robert Cull & Lance E. Davis & Naomi R. Lamoreaux & Jean-Laurent Rosenthal, 2005. "Historical Financing of Small- and Medium-Sized Enterprises," NBER Working Papers 11695, National Bureau of Economic Research, Inc.
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  7. Altunbas, Yener & Evans, Lynne & Molyneux, Philip, 2001. "Bank Ownership and Efficiency," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 33(4), pages 926-54, November.
  8. Hartarska, Valentina, 2005. "Governance and performance of microfinance institutions in Central and Eastern Europe and the Newly Independent States," World Development, Elsevier, Elsevier, vol. 33(10), pages 1627-1643, October.
  9. Fama, Eugene F & Jensen, Michael C, 1983. "Separation of Ownership and Control," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 26(2), pages 301-25, June.
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Cited by:
  1. Hudon, Marek & Périlleux, Anaïs, 2014. "Surplus distribution and characteristics of social enterprises: Evidence from microfinance," The Quarterly Review of Economics and Finance, Elsevier, Elsevier, vol. 54(2), pages 147-157.
  2. Arvind Ashta & Marek Hudon, 2009. "To whom should we be fair? Ethical issues in Balancing Stakeholder Interests from Banco Compartamos Case Study," Working Papers CEB, ULB -- Universite Libre de Bruxelles 09-036.RS, ULB -- Universite Libre de Bruxelles.
  3. Bastiaensen, Johan & Van Hecken, Gert, 2009. "The Potential and Limitations of Markets and Payments for Ecosystem Services in Agricultural Landscape Restoration Critical Reflections Inspired by an Assessment of the RISEMP Program in Matiguás-Rí," IOB Discussion Papers, Universiteit Antwerpen, Institute of Development Policy and Management (IOB) 2009.02, Universiteit Antwerpen, Institute of Development Policy and Management (IOB).
  4. Hubert Tchakoute Tchuigoua, 2010. "Forme juridique et performances des institutions de microfinance," Revue Finance Contrôle Stratégie, revues.org, revues.org, vol. 13(3), pages 39-60., September.
  5. Mersland, Roy & Randøy, Trond & Strøm, Reidar Øystein, 2011. "The impact of international influence on microbanks' performance: A global survey," International Business Review, Elsevier, Elsevier, vol. 20(2), pages 163-176, April.
  6. Mersland, Roy, 2009. "The Cost of Ownership in Microfinance Organizations," World Development, Elsevier, Elsevier, vol. 37(2), pages 469-478, February.
  7. Carlos Serrano-Cinca & Begoña Gutiérrez-Nieto, 2012. "Microfinance, the long tail and mission drift," Working Papers CEB, ULB -- Universite Libre de Bruxelles 12-001, ULB -- Universite Libre de Bruxelles.
  8. Bastiaensen, Johan & Marchetti, Peter, 2010. "Microfinanzas Rurales y Cadenas de Valor Agropecuarias," IOB Working Papers, Universiteit Antwerpen, Institute of Development Policy and Management (IOB) 2010.02, Universiteit Antwerpen, Institute of Development Policy and Management (IOB).
  9. Arrassen, Wassini, 2013. "La microfinance : quelles leçons tirées des expériences des pays en développement ?," Economics Thesis from University Paris Dauphine, Paris Dauphine University, Paris Dauphine University, number 123456789/12692 edited by Avouyi-Dovi, Sanvi.
  10. Dlamini, Menzie S., 2012. "The effect of subsidies on the performance and sustainability of microfinance institutions in sub-Saharan Africa," Research Theses, Collaborative Masters Program in Agricultural and Applied Economics 134487, Collaborative Masters Program in Agricultural and Applied Economics.
  11. Hubert Tchakoute Tchuigoua, 2011. "Contrat de crédit, décentralisation décisionnelle et performance des institutions de microfinance," Revue Finance Contrôle Stratégie, revues.org, revues.org, vol. 14(2), pages 143-173, June.
  12. D'Espallier, Bert & Guérin, Isabelle & Mersland, Roy, 2011. "Women and Repayment in Microfinance: A Global Analysis," World Development, Elsevier, Elsevier, vol. 39(5), pages 758-772, May.
  13. Annabel Vanroose & Bert D’Espallier, 2009. "Microfinance and Financial Sector Development," Working Papers CEB, ULB -- Universite Libre de Bruxelles 09-040.RS, ULB -- Universite Libre de Bruxelles.

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