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

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  • Arvind Ashta
  • Marek Hudon

Abstract

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.

Suggested Citation

  • Arvind Ashta & Marek Hudon, 2009. "To whom should we be fair? Ethical issues in Balancing Stakeholder Interests from Banco Compartamos Case Study," Working Papers CEB 09-036.RS, ULB -- Universite Libre de Bruxelles.
  • Handle: RePEc:sol:wpaper:09-036
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    References listed on IDEAS

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    1. Zeller, Manfred & Meyer, Richard L., 2002. "The triangle of microfinance," Food policy statements 40, International Food Policy Research Institute (IFPRI).
    2. Laurence Attuel-Mendes & Arvind Ashta, 2008. "French Legislation And The Development Of Credit Availability For Microenterprise," Global Journal of Business Research, The Institute for Business and Finance Research, vol. 2(2), pages 123-137.
    3. Marek Hudon, 2009. "Should Access to Credit be a Right?," Journal of Business Ethics, Springer, vol. 84(1), pages 17-28, January.
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    Citations

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    Cited by:

    1. Junyon Im & Sunny Sun, 2015. "Profits and outreach to the poor: The institutional logics of microfinance institutions," Asia Pacific Journal of Management, Springer, vol. 32(1), pages 95-117, March.
    2. repec:spr:jsecdv:v:19:y:2017:i:2:d:10.1007_s40847-018-0049-3 is not listed on IDEAS
    3. repec:dau:papers:123456789/7858 is not listed on IDEAS
    4. Tzu-Kuan Chiu, 2014. "Putting Responsible Finance to Work for Citi Microfinance," Journal of Business Ethics, Springer, vol. 119(2), pages 219-234, January.
    5. Marie Briere & Ariane Szafarz, 2011. "Investment in Microfinance Equity: Risk, Return, and Diversification Benefits," Working Papers CEB 11-050, ULB -- Universite Libre de Bruxelles.
    6. Beatriz Armendáriz & Ariane Szafarz, 2011. "On Mission Drift in Microfinance Institutions," World Scientific Book Chapters,in: The Handbook Of Microfinance, chapter 16, pages 341-366 World Scientific Publishing Co. Pte. Ltd..
    7. Marek Hudon & Anaïs Périlleux, 2011. "Performance Management of Double Bottom Line Institutions: Evidence from Banco Compartamos’s Productivity Distribution," Working Papers CEB 11-056, ULB -- Universite Libre de Bruxelles.
    8. Marco Tavanti, 2013. "Before Microfinance: The Social Value of Microsavings in Vincentian Poverty Reduction," Journal of Business Ethics, Springer, vol. 112(4), pages 697-706, February.

    More about this item

    Keywords

    Agency problem; business ethics; fairness; governance; microfinance; stakeholder;

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