Maturity Mismatch and Governance of Microfinance Cooperatives: Lessons from History

Anaïs Périlleux ()

No 10-005.RS, Working Papers CEB from ULB -- Universite Libre de Bruxelles

Abstract: This article shows how today’s West African microfinance cooperatives could learn from the experience of 19th century German financial cooperatives (FCs) to address their members’ need for long-term loans, especially in rural areas. FCs have short-term internal resources, consisting mainly of members’ savings. Thus, providing long-term loans requires dealing with a maturity mismatch, which in turns leads to governance issues. The 19th century German FCs provided long-term loans (10 years and more) thanks to two mechanisms: the liquidity facilities provided by regional centrals and an efficient corporate governance system based on cooperative auditing associations. We discuss the feasibility of implementing those mechanisms in today’s West African microfinance cooperatives and come up with practical policy-oriented recommendations.

Keywords: Microfinance; Cooperative; Governance; long-term loan; maturity mismatch (search for similar items in EconPapers)
Pages: 28 p.
Date: 2010
New Economics Papers: this item is included in nep-mfd
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Citations: View citations in EconPapers (2)

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