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- Title
Micro-credit and Micro-equity: The David and the Goliath of Micro-enterprise Financing.
- Authors
Ayayi, Ayi Gavriel
- Abstract
I argue that micro-equity may be used to complement or substitute micro-credit programmes, which involve lending rather than risk sharing. By becoming a stockholder in the micro-enterprise rather than a lender, the micro-equity provider is in a more tightly coupled relationship, providing knowledge and guidance necessary for ensuring success of the venture. Moreover, I show that while micro-credit financing places a heavy cash drain on micro-enterprises and leads to sub-optimal growth during the course of the evolution of the micro-enterprise, the mix of micro-equity with micro-credit may prove to be more valuable to nurture the sustainable growth of micro-enterprises.
- Subjects
MICROFINANCE; BUSINESS enterprises; SMALL business; POVERTY reduction; ETHICAL investments; RISK sharing; STOCKHOLDERS; ECONOMIC development
- Publication
Economic Papers, 2012, Vol 31, Issue 2, p244
- ISSN
0812-0439
- Publication type
Article
- DOI
10.1111/j.1759-3441.2011.00144.x