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To whom should we be fair? Ethical issues in Balancing Stakeholder Interests from Banco Compartamos Case Study

  • Arvind Ashta
  • Marek Hudon

In the world of microfinance, interest rate ethics is an important issue, thrown into the limelight by the Initial Public Offering of Compartamos which resulted in millions of dollars of gains, some of which found their way into private pockets. These high gains were based on high interest rates, raising ethical questions. The paper then uses a stakeholder analysis to explain the interests of different stakeholders in this case and present that fairness to one group of stakeholders is often at the expense of another group. We take the position that in this case, specifically, the firm objectives could have been met without such ethical trade-offs. The specifics of the case are then generalised to all NGOs participating in for-profit firms.

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Paper provided by ULB -- Universite Libre de Bruxelles in its series Working Papers CEB with number 09-036.RS.

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Length: 34 p.
Date of creation: 2009
Date of revision:
Publication status: Published by:
Handle: RePEc:sol:wpaper:09-036
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  1. Marek Hudon, 2007. "Should Access to Credit be a Right ?," Working Papers CEB 07-008.RS, ULB -- Universite Libre de Bruxelles.
  2. Niels Hermes & Robert Lensink, . "The empirics of microfinance: what do we know?," ULB Institutional Repository 2013/14198, ULB -- Universite Libre de Bruxelles.
  3. Jonathan Morduch, 1999. "The Microfinance Promise," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1569-1614, December.
  4. Arvind Ashta, 2009. "Microcredit Capital Flows and Interest Rates: An Alternative Explanation," Journal of Economic Issues, M.E. Sharpe, Inc., vol. 43(3), pages 661-684, September.
  5. Constant Mews & Ibrahim Abraham, 2007. "Usury and Just Compensation: Religious and Financial Ethics in Historical Perspective," Journal of Business Ethics, Springer, vol. 72(1), pages 1-15, April.
  6. Robert Cull & Asli Demirguç-Kunt & Jonathan Morduch, 2007. "Financial performance and outreach: a global analysis of leading microbanks," Economic Journal, Royal Economic Society, vol. 117(517), pages F107-F133, 02.
  7. Zeller, Manfred & Meyer, Richard L., 2002. "The triangle of microfinance," Food policy statements 40, International Food Policy Research Institute (IFPRI).
  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. Copestake, James, 2007. "Mainstreaming Microfinance: Social Performance Management or Mission Drift?," World Development, Elsevier, vol. 35(10), pages 1721-1738, October.
  10. Hermes, Niels & Lensink, Robert & Mehrteab, Habteab T., 2005. "Peer Monitoring, Social Ties and Moral Hazard in Group Lending Programs: Evidence from Eritrea," World Development, Elsevier, vol. 33(1), pages 149-169, January.
  11. Marc Labie & Anaïs Périlleux, 2008. "Corporate governance in microfinance: credit unions," Working Papers CEB 08-003.RS, ULB -- Universite Libre de Bruxelles.
  12. Beatriz Armendariz & Jonathan Morduch, 2007. "The Economics of Microfinance," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262512017, June.
  13. Annabel Vanroose, 2008. "What macro factors make microfinance institutions reach out?," Working Papers CEB 08-036.RS, ULB -- Universite Libre de Bruxelles.
  14. Stephen Brammer & Andrew Millington, 2004. "The Development of Corporate Charitable Contributions in the UK: A Stakeholder Analysis," Journal of Management Studies, Wiley Blackwell, vol. 41(8), pages 1411-1434, December.
  15. Roy Mersland & Reidar Øystein Str�m, 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.
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