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The cost of ownership in microfinance organization

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  • Mersland, Roy

Abstract

This article analyses the cost of ownership in microfinance organizations. We specifically compare the ownership-cost of Shareholders Firms (SHFs), Non Profit Organizations (NPOs) and Cooperatives (COOPs). A paradoxical situation motivates us: Most providers of microfinance, both historically and today, are NPOs or COOPs, while several policy papers advocate SHFs. Based on an extension of Hansmann’s (1996) economic theory of ownership we propose that cost variables related to market contracting of microfinance services favor NPOs and COOPs, whereas most cost variables related to the practice of ownership favor SHFs. We conclude that in severe imperfect markets, where most microfinance organizations operate, NPOs and COOPs are still needed.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 2061.

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Date of creation: 15 Jan 2007
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Handle: RePEc:pra:mprapa:2061

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Keywords: Microfinance; ownership; corporate governance; nonprofits; transformation; global study;

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Citations

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Cited by:
  1. Marie Briere & Ariane Szafarz, 2011. "Investment in Microfinance Equity: Risk, Return, and Diversification Benefits," Working Papers CEB, ULB -- Universite Libre de Bruxelles 11-050, ULB -- Universite Libre de Bruxelles.
  2. D’Espallier, Bert & Hudon, Marek & Szafarz, Ariane, 2013. "Unsubsidized microfinance institutions," Economics Letters, Elsevier, Elsevier, vol. 120(2), pages 174-176.
  3. 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.
  4. Biener, Christian & Eling, Martin & Schmit, Joan T., 2013. "Regulation in Microinsurance Markets: Principles, Practice, and Directions for Future Development," Working Papers on Finance, University of St. Gallen, School of Finance 1305, University of St. Gallen, School of Finance.
  5. Tchakoute-Tchuigoua, Hubert, 2010. "Is there a difference in performance by the legal status of microfinance institutions?," The Quarterly Review of Economics and Finance, Elsevier, Elsevier, vol. 50(4), pages 436-442, November.
  6. Mersland, Roy & Øystein Strøm, R., 2009. "Performance and governance in microfinance institutions," Journal of Banking & Finance, Elsevier, Elsevier, vol. 33(4), pages 662-669, April.
  7. Beatriz Armendariz & Bert D'Espallier & Marek Hudon & Ariane Szafarz, 2011. "Subsidy Uncertainty and Microfinance Mission Drift," Working Papers CEB, ULB -- Universite Libre de Bruxelles 11-014, ULB -- Universite Libre de Bruxelles.
  8. Strøm, Reidar Øystein & D’Espallier, Bert & Mersland, Roy, 2014. "Female leadership, performance, and governance in microfinance institutions," Journal of Banking & Finance, Elsevier, Elsevier, vol. 42(C), pages 60-75.
  9. Mersland, Roy & Strøm, R. Øystein, 2010. "Microfinance Mission Drift?," World Development, Elsevier, Elsevier, vol. 38(1), pages 28-36, January.
  10. Neema Mori & Roy Mersland, 2014. "Boards in microfinance institutions: how do stakeholders matter?," Journal of Management and Governance, Springer, Springer, vol. 18(1), pages 285-313, February.
  11. 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.
  12. 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.
  13. Barry, Thierno Amadou & Tacneng, Ruth, 2014. "The Impact of Governance and Institutional Quality on MFI Outreach and Financial Performance in Sub-Saharan Africa," World Development, Elsevier, Elsevier, vol. 58(C), pages 1-20.
  14. 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.

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