Publications
Papers in Refereed Journals
- 2013 Unsubsidized Microfinance Institutions Economics Letters forthcoming
- 2013 Fairness and microcredit interest rates: From Rawlsian principles of justice to the distribution of the bargaining range Business Ethics: A European Review forthcoming
- 2013 Microfinance studies: introduction and overview Oxford Development Studies forthcoming
- 2012 Rural and Urban Microfinance Design Issue: An Analysis of Transaction Costs in India Oxford Development Studies forthcoming
- 2012 The Compartamos microfinance IPO: Mission conflicts in hybrid institutions with diverse shareholding Strategic Change: Briefings in Entrepreneurial Finance forthcoming
- 2012
Surplus Distribution in Microfinance: Differences Among Cooperative, Non-profit and Shareholder Forms of Ownership
Nonprofit and Voluntary Sector Quarterly
41, pp. 386-404
View the links and abstractThe paper on the Nonprofit and Voluntary Sector Quarterly website
The Nonprofit and Voluntary Sector Quarterly website
The working paper on RePEc How do microfinance institutions (MFIs) allocate their surplus to stakeholders? This article shows that this allocation process varies depending on the MFI ownership structure. Nonprofit organizations and shareholders-held MFIs exhibit a tendency to largely keep their surplus within the MFI as a self-financing margin (reserve accounts, future investments, and capital increase) rather than transferring it to their clients (interest rate decrease) and their employees (salary increase). The surplus distribution in COOPs is more in favor of providers and employees. Finally, the article discusses the importance of these findings for the evaluation of MFIs by policy makers. - 2011
Performance Management of Double Bottom Line Institutions: Evidences from Banco Compartamos's Productivity Distribution
Journal of Cost Management
forthcoming
View the link and abstractThe paper on RePEc
We use an innovative methodology to analyze social responsibility in double bottom line institutions such as microfinance institutions. We provide empirical evidence on the distribution of the generated surplus between the key stakeholders of one of the most famous MFIs worldwide: Banco Compartamos. Our results suggest that productivity gains generated by the institution have been primarily kept as gross self-financing margin for future investments or dividends for investors. - 2011 La microfinance : de la charité aux affaires : Introduction du numéro spécial Management & Avenir 46
- 2011
Surplus et responsabilité sociale en microfinance :Etude de cas d’institutions péruviennes
Management & Avenir
46
View the links and abstractThe Management & Avenir website
The working paper on RePEc This paper analyses the distribution of the productivity surplus of three microfinance institutions, with different statuses, in Peru. The results show that the NGO favors its clients and its self-financing margin, which could help it to grow more rapidly and to keep some reserves. The cooperative prefers to give higher returns on its savings. - 2011
On the Efficiency Effects of Subsidies in Microfinance: An Empirical Inquiry
World Development
39(6), pp. 966-973
View the links and abstractThe paper on the Science Direct website
The World Development website
The paper on RePEc The impact of subsidies on the efficiency of microfinance institutions (MFIs) is a key question in the field, given the large volume of subsidies received over the last twenty years. Using an original database of rating agencies, this paper gives empirical evidence on the impact of subsidy intensity on the efficiency of MFIs. After correcting for endogeneity bias, our results suggest that subsidies have contributed to raise efficiency, for the majority of MFIs in our sample. However, the evidence suggests also that there is a level beyond which increased subsidization taxes efficiency, at the margin. In our sample, 50% of MFIs receive levels of subsidization higher than that threshold. - 2010
Une institution de microfinance éthique?
Mondes en Développement
150/3, pp. 83-96
View the links and abstractThe paper on the Cairn.info website
The Mondes en Développement website
The paper on RePEc Cette contribution questionne la microfinance par une étude de quelques dimensions éthiques majeures. Nous étudions d'abord l'a priori éthique favorable de la microfinance et ensuite l'émergence de la question éthique dans ce secteur. Nous analysons ensuite deux cadres éthiques spécifiques, les approches de vertu et approches managériales. Pour compléter ceux-ci, nous appliquons ensuite trois principes de responsabilité, autour des notions de capacité, de connaissance et de liberté d'action à la microfinance. - 2010
Management of Microfinance Institutions: Do Subsidies Matter?
Journal of International Development
22, 7, pp. 890-905
View the links and abstractThe paper on the Journal of International Development website
The Journal of International Development website
The paper on RePEc It is estimated that donors commit between US$ 800 million and US$ 1 billion to microfinance per year. This paper analyses the management of microfinance institutions (MFIs) and its relationship with donors' subsidies. The results show that the level of subsidies granted per year is related to the management quality but not the subsidies divided by the gross loan portfolio or the total equity. Well-managed MFIs are larger and regulated organisations but not significantly older. The organisational structure or the experience of the MFI however does not play a role in determining its financial effectiveness, except for cooperatives. - 2009 La politique des bailleurs en microfinance. Qu'en est-il pour les zones rurales ? Cahiers du CEDIMES 3(2), pp. 123-141
- 2009
Should Access to Credit be a Right?
Journal of Business Ethics
84, pp. 17-28.
View the links and abstractThe paper on the Journal of Business Ethics website
The Journal of Business Ethics website
The paper on RePEC Discussion on financial ethics increasingly includes the problem of exclusion of the poorer segments of society from the financial system and access to credit. This paper explores the ethical dimensions surrounding the concept of a human right to credit. If access to credit is directly instrumental to economic development, poverty reduction and the improved welfare of all citizens, then one can proclaim, as Nobel Prize Laureate M. Yunus has done, that it is a moral necessity to establish credit as a right. Arguments both supporting and opposing the concept of a right to credit are presented. While there may be general agreement that access to financial services may provide a pathway out of poverty, granting a universal right could induce perverse effects such as overindebtedness. Bearing in mind the ultimate goal of proponents of this right as well as the potential harmful consequences, this paper offers a new perspective on the question of access to credit based on a goal-right system. - 2008
Etude des facteurs contingents du taux de remboursement au sein d'une institution de microfinance : le cas du Togo
Annals of Public and Cooperative Economics
79, 2 pp. 301-32
View the links and abstractThe paper on the Annals of Public and Cooperative Economics website
The Annals of Public and Cooperative Economics website
The paper on RePEc Parmi les facteurs contingents du taux de remboursement des microcrédits, la responsabilité solidaire des emprunteurs est peu analysée dans les études empiriques. Grâce à la constitution d'une base de données originale, cet article s'attache à estimer l'impact des facteurs contingents du taux de remboursement, dont la forme du prêt. Les résultats dégagés font apparaître que, d'une part, dans la catégorie des prêts remboursés dans les délais, les prêts individuels offrent un meilleur taux de recouvrement mais aussi, d'autre part, que cet effet s'estompe dès lors que sont incorporés les remboursements tardifs. Parmi les autres facteurs contingents du taux de remboursement, on dénombre principalement la distance entre le lieu de résidence des clients et le siège de l'institution et l'objet du crédit - 2008
Norms and Values of the Various Microfinance Institutions
International Journal of Social Economics
1-2, pp. 35-48
View the links and abstractThe paper on the International Journal of Social Economics website
The International Journal of Social Economics website
The paper on RePEc The paper aims to study the role of norms and values in the microfinance sector. The paper provides a combination of narrative with argument and analysis. A classification of the sector is proposed, mapping the institutions along two axes: the profit motive (profit vs not-for-profit) and the decision-making style (centralized vs un-centralized). Some microfinance institutions base their interactions on rigid norms or rules; while others are based on values. It is argued that the private sector will tend to produce the operating rules of the microfinance system while the not-for-profit institutions that are using an inclusive decision-making process are more likely to influence the ethical norms in the sector. Nevertheless, this classification is not static as recent events in South-India shows that norms, such as the interest rates, can be politically and emotionally invested to the point that they are about to become values in the sector. The conclusions drawn help in understanding the interactions between the various actions in microfinance. Exploiting the full range of the possibilities of those different structures may be valuable for a fully successful development in India. - 2007 Fair Interest Rates When Lending to the Poor Ethics and Economics 5, 1, pp. 1-8
- 2007
Use of Microfinance in Post-conflict and Post-disaster Situations: Turning Victims into Shareholders
Savings and Development
5, pp. 5-22
View the link and abstractThe paper on RePEc
In recent years, large numbers of developing and transitional countries have ex¬peri¬enced situations of crisis, following political, economic or natural disasters, or total crisis, triggered by war or totalitarian oppression. The goal of this article is to study the role of member-owned institutions (MOIs) in the provision of the reparations for victims of human rights abuses or reconstruction in post-conflict and post-disaster situations. We argue that grants usually awarded for reconstruction in post-conflict areas or for reparations payments in post-disaster areas could be best turned into equity and deposits to foster MOIs. MOIs are found to be an appropriate institutional framework, to make the benefits of one-off payments more sustainable and also reinforce the financial sector. - 2006 Natural Savings: A New Microsavings Product for Inflationary Environments. How to Save Forests with Savings for and by the Poor? Savings and Development 4, pp. 357-381
- 2006
Training in Microfinance: Is there a Role for Academic Institutions?
European Dialogue
36, pp. 60-66
View the links and abstractThe paper in PDF format on the European Dialogue website
The European Dialogue website Le développement du secteur de la microfinance a stimulé la demande de programmes d’éducation spécifiques. Cet article examine les caractéristiques et les objectifs de ces programmes. Nous abordons tout d’abord le pourquoi des programmes de formation en microfinance. Nous examinons ensuite les publics visés et leurs spécificités. Nous analysons enfin le rôle des programmes académiques consacrés à la microfinance. - 2004 New Challenges in Microfinance: The Case for Extending its Range of Financial Services Belgian Banking Review 6, pp. 333-338
- 2004 Introduction to the Special Issue on Microfinance Belgian Banking Review 6, pp. 265-270
Chapters in books
- 2011 Ethics in Microfinance in Armendariz B. and M. Labie (Eds.) The Handbook of Microfinance Singapore: World Scientific Publishing
- 2011 Efficiency in Armendariz B. and M. Labie (Eds.) The Handbook of Microfinance Singaore: World Scientific Publishing
- 2009 Ethical Challenges in the Inclusion of the Poor in the Financial Sector in Eisendrath E. and J.-P. van Bendegem (Eds.) It Takes Two to Do Science: The Puzzling Interactions Between Science and Society Brussels: VUB Press, pp. 71-96
- 2009 Microfinance pour l'agriculture des pays du Sud: Etats des lieux et tendances actuelles - introduction in Morvant-Roux S. (Eds.) Rapport Exclusions et liens financiers 2008-2009 Paris: Economica, pp. 25-33
- 2005 Microfinance and IT, an Important Partnership in Weiler R. and A. Waheed Khan (Eds.) ICT for Capacity-Building: Critical Success Factors Paris: UNESCO & Club of Rome, pp. 63-69
Book Reviews
- 2010 Portfolios of the Poor Development and Change 40,1
- 2008 The Economics of Microfinance, Book Review Journal of International Development 20, 2, pp. 245-246
Editorship
- 2011Guest Editor of a special issue in Management & Avenir on microfinance (11/2011)
- 2007Guest Editor of a special issue in Ethics and Economics on Ethics in Microfinance (09/2007)
- 2004Guest Editor of a special issue in Belgian Banking Review on Microfinance (09/2004)
Working Papers
- 2011 Performance Management of Double Bottom Line Institutions: Evidence from Banco Compatamo's Productivity Distribution Working Papers CEB 11-056, Centre Emile Bernheim, SBS-EM, Universite Libre de Bruxelles - ULB View the link and abstractThe paper on RePEc
We use an innovative methodology to analyze social responsibility in double bottom line institutions such as microfinance institutions. We provide empirical evidence on the distribution of the generated surplus between the key stakeholders of one of the most famous MFIs worldwide: Banco Compartamos. Our results suggest that productivity gains generated by the institution have been primarily kept as gross self-financing margin for future investments or dividends for investors. - 2011 Surplus et responsabilité sociale en microfinance :Etude de cas d’institutions péruviennes Working Papers CEB 11-036, Centre Emile Bernheim, SBS-EM, Université Libre de Bruxelles - ULB View the link and abstractThe paper on RePEc
This paper analyses the distribution of the productivity surplus of three microfinance institutions, with different statuses, in Peru. The results show that the NGO favors its clients and its self-financing margin, which could help it to grow more rapidly and to keep some reserves. The cooperative prefers to give higher returns on its savings. - 2011 Subsidy Uncertainty and Microfinance Mission Drift Working Papers CEB 11-014, Centre Emile Bernheim, SBS-EM, Universite Libre de Bruxelles - ULB View the links and abstractThe paper on RePEc
The paper on DI-fusion (AUWB - ULB - UMONS)This paper shines light on subsidy-dependent microfinance institutions (MFIs). Firstly, our model shows that subsidy uncertainty can have pervasive effects on MFIs’ poverty-reduction mission. In particular, we argue that supply-driven uncertainty can lead to mission drift. MFIs maximize utility by serving the poor on the one hand, but must be financially sustainable on the other. Under the fear that subsidies can dry up, MFIs lend to wealthier clients in order to build precautionary savings. In a subsidy-uncertain world this is a rational reaction by MFIs struggling to preserve a pool of poor clients. We show that the incidence of mission drift increases with subsidy uncertainty. Secondly, we test the predictions of the model on original data collected from rating agencies assessment reports on 230 MFIs active in 60 countries over the period 1999-2006. Using both cross-section and panel-data regressions, we estimate the effect of subsidies on poverty reduction as proxied by average loan size, interest rates, and outreach. Our results suggest that more subsidies are associated with smaller loan sizes, but that higher subsidy uncertainty is positively correlated with higher interest rates. We also find that subsidy uncertainty is negatively correlated with outreach. - 2011 Towards a Theory of Fair Interest Rates on Microcredit Working Papers CEB 11-019, Centre Emile Bernheim, SBS-EM, Universite Libre de Bruxelles - ULB View the links and abstractThe paper on RePEc
The paper on DI-fusion (AUWB - ULB - UMONS)One of the most salient ethical debates concerning microcredit pertains to the unexpectedly high rates of interest charged on microloans. Microcredit is supposed to be to the advantage of borrowers in some of the poorest regions of the world, but at the same time commercial institutions need to cover their comparably high costs. This article seeks to find a theoretical basis for a more balanced way of setting prices on microcredit; i.e. a theory of fairness in interest rates. By drawing on both contemporary debates in the industry as well as more general philosophical ideas, the article discusses four main theoretical approaches. In the end the authors favour a combination of consequentialism and liberal egalitarianism which seems able to adequately balance the needs of the institutions with the needs of the clients. However it is also acknowledged that further research in the area is needed. - 2010 Productivity Surplus Distribution in Microfinance: Does Ownership Matter? Working Papers CEB 10-036, Centre Emile Bernheim, SBS-EM, Universite Libre de Bruxelles - ULB View the links and abstractThe paper on RePEc
The paper on DI-fusion (AUWB - ULB - UMONS)How do microfinance institutions (MFIs) allocate their productivity surplus to stakeholders? This paper shows that this allocation process varies according to the MFI ownership structure. Non-profit organisations and shareholders-held MFIs exhibit a tendency to largely keep their surplus within the MFI as a self-financing margin (reserve accounts, future investments, and capital increase) rather than transferring it to their clients (interest rates decrease) and their employees (salary increase). Cooperatives however tend to give the largest part of their surplus to the employees and providers. Finally, the paper discusses the importance of those findings for MFIs evaluation by policy makers. - 2010 What Explains Microfinance Distribution Surplus? A Stakeholder-oriented Approach Working Papers CEB 10-045, Centre Emile Bernheim, SBS-EM, Universite Libre de Bruxelles - ULB View the links and abstractThe paper on RePEc
The paper on DI-fusion (AUWB - ULB - UMONS)What are the drivers of productivity surplus distribution to microfinance stakeholders? This paper shows that the size of the institution is the main indicator that can explain the gain in productivity surplus but also the surplus given to clients (decrease of interest rates) and staff. Moreover, cooperatives keep a significantly lesser part of their surplus for future growth, reserve, or distribution to investors. Finally, larger, more subsidised MFIs, and particularly cooperatives, tend to give a greater part of their surplus to their employees. - 2009 To whom should we be fair? Ethical issues in Balancing Stakeholder Interests from Banco Compartamos Case Study Working Papers CEB 09-036, Centre Emile Bernheim, SBS-EM, Universite Libre de Bruxelles - ULB View the links and abstractThe paper on RePEc
The paper on DI-fusion (AUWB - ULB - UMONS)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. - 2008 Norms and Values of the Various Microfinance Institutions Working Papers CEB 08-006, Centre Emile Bernheim, SBS-EM, Universite Libre de Bruxelles - ULB View the links and abstractThe paper on RePEc
The paper on DI-fusion (AUWB - ULB - UMONS)This article studies the role of norms and values in the microfinance sector. Microfinance projects implemented in India use a wide range of different organizational structures. A classification of the sector is proposed, mapping the institutions along two axes: the profit motive (profit vs. not-for-profit) and the decision making style (centralized vs. un-centralized). Some Microfinance Institutions (MFIs) base their interactions on rigid norms or rules; while others are based on values. We argue that the private sector will tend to produce the operating rules of the microfinance system while the not-for-profit institutions that are using an inclusive decision-making process are more likely to influence the ethical norms in the sector. Nevertheless, this classification is not static as recent events in South-India shows that norms, such as the interest rates, can be politically and emotionally invested to the point that they are about to become values in the sector. - 2007 Use of donor funds in the financing of MFIs Working Papers CEB 07-020, Centre Emile Bernheim, SBS-EM, Universite Libre de Bruxelles - ULB View the links and abstractThe paper on RePEc
The paper on DI-fusion (AUWB - ULB - UMONS)This paper focuses on the use of donor funds to finance MFIs. The role of donors in microfinance is rapidly evolving, particularly since the emergence of socially responsible and commercial investors. We argue that public policy should be designed to facilitate the entry of new private actors without abandoning the markets that could not work without some public support. Through a separation of socially-responsible investors from fully commercial ones, we come up to an original classification of the different funding sources and the actors and their potential market in the sector. - 2007 Should Access to Credit be a Right ? Working Papers CEB 07-008, Centre Emile Bernheim, SBS-EM, Universite Libre de Bruxelles - ULB View the links and abstractThe paper on RePEc
The paper on DI-fusion (AUWB - ULB - UMONS)Discussion on financial ethics increasingly includes the problem of exclusion of the poorer segments of society from the financial system and access to credit. This paper explores the ethical dimensions surrounding the concept of a human right to credit. If access to credit is directly instrumental to economic development, poverty reduction and the improved welfare of all citizens, then one can proclaim, as Nobel Prize Laureate M. Yunus has done, that it is a moral necessity to establish credit as a right. Arguments both supporting and opposing the concept of a right to credit are presented. While there may be general agreement that access to financial services may provide a pathway out of poverty, granting a universal right could induce perverse effects such as overindebtedness. Bearing in mind the ultimate goal of proponents of this right as well as the potential harmful consequences, this paper offers a new perspective on the question of access to credit based on a goal-right system. - 2007 Social Justice with Credits to the Poor Working Papers CEB 07-003, Centre Emile Bernheim, SBS-EM, Universite Libre de Bruxelles - ULB View the links and abstractThe paper on RePEc
The paper on DI-fusion (AUWB - ULB - UMONS)Fair prices have been recently addressed through debates on fair trade or fair wage. This paper addresses the fairness of credits to the poor. It first analyzes a few definitions of fair interest rates. It then determines the extent of the ‘just’ range of a price, its major constraints and the methodology to assess the fairness of the distribution. Based on Gauthier’s (1986) work on imperfect markets, a contractarian position is presented. - 2007 Microfinance in Post-disaster and Post-conflict Situations: Turning Victims into Shareholders Working Papers CEB 07-002, Centre Emile Bernheim, SBS-EM, Universite Libre de Bruxelles - ULB View the links and abstractThe paper on RePEc
The paper on DI-fusion (AUWB - ULB - UMONS)In recent years, large numbers of developing and transitional countries have experienced situations of crisis, following political, economic or natural disasters, or total crisis, triggered by war or totalitarian oppression. The goal of this article is to study the role of member-owned institutions (MOIs) in the provision of the reparations for victims of human rights abuses or reconstruction in post-conflict and post-disaster situations. We argue that grants usually awarded for reconstruction in post-conflict areas or for reparations payments in post-disaster areas could be best turned into equity and deposits to foster MOIs. MOIs are found to be an appropriate institutional framework, to make the benefits of one-off payments more sustainable and also reinforce the financial sector. - 2006 On the Efficiency Effects of Subsidies in Microfinance: an Empirical Inquiry Working Papers CEB 06-020, Centre Emile Bernheim, SBS-EM, Universite Libre de Bruxelles - ULB View the links and abstractThe paper on RePEc
The paper on DI-fusion (AUWB - ULB - UMONS)The impact of subsidies on the efficiency of microfinance institutions (MFIs) is a key question in the field, given the large volume of subsidies received over the last twenty years. Using an original database of rating agencies, this paper gives empirical evidence on the impact of subsidy intensity on the efficiency of MFIs. After correcting for endogeneity bias, our results suggest that subsidies have contributed to raise efficiency, for the majority of MFIs in our sample. However, the evidence suggests also that there is a level beyond which increased subsidization taxes efficiency, at the margin. In our sample, 50% of MFIs receive levels of subsidization higher than that threshold. - 2006 Fair Interest Rates when Lending to the Poor: Are Fair Prices Derived from Basic Principles of Justice? Working Papers CEB 06-015, Centre Emile Bernheim, SBS-EM, Universite Libre de Bruxelles - ULB View the links and abstractThe paper on RePEc
The paper on DI-fusion (AUWB - ULB - UMONS)This paper addresses the fairness of prices, with a focus on fair interest rates as they apply to microlending transactions for the poor. Under different assumptions on fairness in interest rate policies and the principles of justice as described in A Theory of Justice (Rawsl, 1976), the paper determines the extent of the ‘just’ range of a price. Using the original notion of fair reservation price and fair bargaining range, it is shown that some unfair considerations can make the fair bargaining range negative. Therefore, we propose an additional criterion for fairness: a fair distribution of the benefits within the fair bargaining range between borrowers and lenders. This new criterion is particularly useful and relevant, at minimum, for socially-minded ones active on the microfinance markets. - 2005 Subsidies and Financial Performances of the Microfinance Institutions: Does Management Matter? Working Papers CEB 05-015, Centre Emile Bernheim, SBS-EM, Universite Libre de Bruxelles - ULB View the links and abstractThe paper on RePEc
The paper on DI-fusion (AUWB - ULB - UMONS)This paper uses a unique database from a leading microfinance rating agency to assess the impact of management on the functioning of microfinance institutions (MFIs). It focuses on MFIs’ financial performance, and on the level of subsidies received. The results show that the management skills are associated to the financial performances. The technical, organisational and communication competences of the top managers seem to play a key role among the four management dimensions analysed by the rating agency. Furthermore, the level of subsidies granted has a very limited impact on management quality. Results show that the well-managed MFIs are not significantly older or active in corrupted countries.
Also view