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Performance and trade‐offs in Microfinance Organisations—Does ownership matter?
Author(s) -
Mersland Roy,
Strøm Reidar Øystein
Publication year - 2008
Publication title -
journal of international development
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.533
H-Index - 66
eISSN - 1099-1328
pISSN - 0954-1748
DOI - 10.1002/jid.1432
Subject(s) - shareholder , microfinance , government (linguistics) , transformation (genetics) , adaptation (eye) , industrial organization , business , economics , microeconomics , accounting , finance , corporate governance , economic growth , linguistics , philosophy , biochemistry , chemistry , gene , physics , optics
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.