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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 Strøm

    (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.

Suggested Citation

  • Roy Mersland & Reidar Øystein Strøm, 2008. "Performance and trade-offs in Microfinance Organisations-does ownership matter?," Journal of International Development, John Wiley & Sons, Ltd., vol. 20(5), pages 598-612.
  • Handle: RePEc:wly:jintdv:v:20:y:2008:i:5:p:598-612
    DOI: 10.1002/jid.1432
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    File URL: http://hdl.handle.net/10.1002/jid.1432
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    References listed on IDEAS

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