Microbanks: Ownership, performance and social tradeoffs - a global analysis
AbstractSuppliers of microfinance are typically Non Governmental Organizations (NGOs), cooperatives or specialized microfinance institutions incorporated as Shareholder Firms (SHFs). Leaving out the cooperatives we study whether NGOs and SHFs differ in bringing along social benefit to their clients. Specifically, is there a trade-off between different dimensions of social benefits, and can these tradeoffs predict ownership type? To frame the comparison of NGOs and SHFs we make use of Schreiner’s (2002) framework for discussion of the social benefits of microfinance. A self constructed dataset with unusually high-quality rating information from 132 NGOs and 68 SHFs in 53 countries is used to carry out the statistical tests. Our findings indicate that SHFs and NGOs are more similar than different. Our hypothesis that NGOs are more socially oriented than SHFs is rejected. SHFs’ benefit in scale and scope seems not related to ownership, but to legal constraints impeding NGOs to mobilize savings. Our second conclusion is that we cannot find a trade-off among outreach variables. Specifically, the return on assets is higher in NGOs. We conclude that ownership doesn’t influence the performance of microfinance organizations. Our conclusion is in line with findings in the general banking industry.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 2063.
Date of creation: 30 Jan 2007
Date of revision:
Microfinance; outreach tradeoffs; transformation; commercialization; ownership; corporate governance;
Find related papers by JEL classification:
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-03-10 (All new papers)
- NEP-DEV-2007-03-10 (Development)
- NEP-MFD-2007-03-10 (Microfinance)
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