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

  • Roy Mersland

    (Agder University, Kristiansand, Norway)

  • Reidar Øystein Str�m

    (Østfold University College, 1757, Halden, Norway)

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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File URL: http://hdl.handle.net/10.1002/jid.1432
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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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  1. repec:idb:brikps:78868 is not listed on IDEAS
  2. 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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  6. J. D. Von Pischke, 1996. "Measuring the trade-off between outreach and sustainability of microenterprise lenders," Journal of International Development, John Wiley & Sons, Ltd., vol. 8(2), pages 225-239.
  7. Mark Schreiner, 2002. "Aspects of outreach: a framework for discussion of the social benefits of microfinance," Journal of International Development, John Wiley & Sons, Ltd., vol. 14(5), pages 591-603.
  8. 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 24568, European Association of Agricultural Economists.
  9. Joanna Ledgerwood & Victoria White, 2006. "Transforming Microfinance Institutions : Providing Full Financial Services to the Poor," World Bank Publications, The World Bank, number 7086.
  10. Hartarska, Valentina, 2005. "Governance and performance of microfinance institutions in Central and Eastern Europe and the Newly Independent States," World Development, Elsevier, vol. 33(10), pages 1627-1643, October.
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