Microfinance institutions and public policy

Hardy, Daniel; Holden, Paul; Prokopenko, Vassili

doi:10.1080/1350485032000175637

Cited by 53 publications

(44 citation statements)

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“…In particular, they emphasis that NGOs are less commercial and professional because they lack owners with the pecuniary incentive to monitor management (Berenbach and Churchill, 1997, C-GAP, 2003, Chavez and GonzalezVega, 1994, Christen and Rosenberg, 2000, Greuning et al, 1998, Hardy et al, 2003, Jansson et al, 2004, Staschen, 1999, Drake and Rhyne, 2002. The implicit message is that SHFs benefit from better governance, can access more funding and thus perform better than NGOs.…”

Section: Microfinance Policies and Ownership Theoriesmentioning

confidence: 99%

Performance and trade‐offs in Microfinance Organisations—Does ownership matter?

Mersland¹,

Strøm

2008

J of Intl Development

141

114

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Policy advocates argue for the transformation of non-government Microfinance Organizations (MFOs) into shareholder owned firms. 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 mobilize savings appears to be a better option than transformation.68

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Section: Microfinance Policies and Ownership Theoriesmentioning

confidence: 99%

Performance and trade‐offs in Microfinance Organisations—Does ownership matter?

Mersland¹,

Strøm

2008

J of Intl Development

141

114

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show abstract

“…Today, even a country like Congo (DRC), crippled by conflict and poverty, has a banking law aimed at reducing depositors' risk. During the last decade, emphasis has been placed on how to regulate microfinance operations and organizations effectively, and most of the important bilateral and multilateral agencies have commissioned policy documents and guidelines (Berenbach and Churchill, 1997, Christen et al, 2003, Chavez and Gonzalez-Vega, 1994, Christen and Rosenberg, 2000, Greuning et al, 1998, Hardy et al, 2003, Jansson et al, 2004, Staschen, 1999. However, what seems to be generally overestimated is the capacity of such schemes to monitor institutions effectively in countries where corruption blossoms and banking authorities are generally weak.…”

Section: Market Inefficiency # 4: the Cost Of Asymmetric Information mentioning

confidence: 99%

“…Policy papers generally advocate SHFs as the most appropriate ownership type for the microfinance market (Berenbach and Churchill, 1997, C-GAP, 2003, Chavez and GonzalezVega, 1994, Christen and Rosenberg, 2000, Greuning et al, 1998, Hardy et al, 2003, Jansson et al, 2004, Staschen, 1999. The arguments used are that SHFs can be regulated by banking authorities, accept deposits, provide a larger range of better quality services, be independent from donors, attract private equity capital, and benefit from superior corporate governance because they are privately owned.…”

Section: Ownership Policies and Empirics In The Microfinance Industrymentioning

confidence: 99%

The Cost of Ownership in Microfinance Organizations

2009

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We compare the ownership-cost of Shareholders Firms (SHFs), Non Profit Organizations (NPOs), and Cooperatives (COOPs) involved in microfinance. A paradoxical situation motivates us: most providers, both historically and today, are NPOs or COOPs, while policy papers advocate SHFs. We lay out a theoretical framework to understand ownership costs in microfinance organizations better. We propose that cost variables related to market contracting favor NPOs and COOPs, whereas most cost variables related to the practice of ownership favor SHFs. We conclude that what best serves the customers is the coexistence of ownership types and call for empirical research to test this theory.32

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“…At the other extreme are microenterprises. Although these firms have traditionally lacked access to formal financing, in recent years there has been a vigorous expansion of commercial microfinance, driven by the development of innovative lending techniques, significant technological advances (scoring methods, e-banking), and the growing presence of credit bureaus (see Hardy, Holden, and Prokopenko 2002;CGAP 2003CGAP , 2004Daley-Harris 2003). Accompanying these trends in business lending has been strong growth in consumer credit in emerging market economies (see, for example, BIS 2005; The Economist 2006), especially as competition in the lending market for large corporations increased-reflecting financial globalization and the expansion of local bond markets.…”

Section: Financing For Small-and Medium-size Enterprisesmentioning

confidence: 99%

Financial Development: Maturing and Emerging Policy Issues

Torre¹,

Gozzi²,

Schmukler³

2007

The World Bank Research Observer

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In recent decades, financial development policies in emerging market economies have been shaped by a fundamental shift toward market-based financial systems and the lessons from financial crises. Today, there is consensus that financial development depends on financial stability and convergence toward international standards. While the debate on some issues has matured, policy thinking in other areas is changing, fueled by recent experiences. This article analyzes the evolution of policy thinking on financial development and discusses three areas that are important to achieving deeper financial systems: stock market development, small-and medium-size enterprise financing, and defined-contribution pension systems. The main emerging issues in these areas are illustrated using recent experiences in Latin America. The article concludes that there is a need to take a fresh look at the evidence, improve diagnoses, and revisit expectations. JEL codes: F36, G15, G18, G20.Policymakers concerned with financial development in emerging market economies face an increasingly complex and perplexing situation. Despite the many efforts already undertaken to improve the macroeconomic environment and reform the institutions believed to foster financial development, financial markets in most emerging economies remain relatively underdeveloped. The more stable, internationalized, and better regulated financial systems of today do not seem to be contributing to social and economic development as much as expected at the beginning of the reform process. This has left policymakers with no clear guidance on how to move forward on the financial market development process and has brought to the forefront of policymakers' agenda some big emerging issues in critical areas of financial development that have not been adequately addressed in the policy debate. These issues have emerged after other important policy issues have been settled and as experience has started to show

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Microfinance institutions and public policy

Cited by 53 publications

References 0 publications

Performance and trade‐offs in Microfinance Organisations—Does ownership matter?

Performance and trade‐offs in Microfinance Organisations—Does ownership matter?

The Cost of Ownership in Microfinance Organizations

Financial Development: Maturing and Emerging Policy Issues

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