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The Cost of Ownership in Microfinance Organizations

  • Mersland, Roy

Summary We compare the ownership-cost of shareholders firms (SHFs), non-profit organizations (NPOs), and cooperatives (COOPs) involved in microfinance. A paradoxical situation motivates us: most providers, both historically and today, are NPOs or COOPs, while policy papers advocate SHFs. We lay out a theoretical framework to understand ownership-costs in microfinance organizations (MFOs) better. We propose that cost-variables related to market contracting favor NPOs and COOPs, whereas most cost-variables related to the practice of ownership favor SHFs. We conclude that what best serves the customers is the coexistence of ownership types and call for empirical research to test this theory.

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Article provided by Elsevier in its journal World Development.

Volume (Year): 37 (2009)
Issue (Month): 2 (February)
Pages: 469-478

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Handle: RePEc:eee:wdevel:v:37:y:2009:i:2:p:469-478
Contact details of provider: Web page: http://www.elsevier.com/locate/worlddev

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