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Maturity Mismatch and Governance of Microfinance Cooperatives: Lessons from History

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  • Anaïs A Périlleux

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.

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  • Anaïs A Périlleux, 2010. "Maturity Mismatch and Governance of Microfinance Cooperatives: Lessons from History," Working Papers CEB 10-005.RS, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:sol:wpaper:10-005
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    Cited by:

    1. AGAÏ, Oniankitan Gregoire, 2012. "Assessing the Viability of a Rural Microfinance Network : The Case of FONGS FINRURAL," MPRA Paper 47176, University Library of Munich, Germany.
    2. Moulin, Bertrand, 2011. "Microfinance investment vehicles in Sub-Saharan Africa: constraints and potentials," MPRA Paper 32967, University Library of Munich, Germany.

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    Keywords

    Microfinance; Cooperative; Governance; long-term loan; maturity mismatch;
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