The Ethics of Microfinance and Cooperation

This paper contrasts the approach to lending that microfinance and traditional cooperatives have, and states that both are motivated by different approaches to their ethical principle. It elaborates that the ethical principle that gives unity to the microfinance movement is the emphasis on the outcomes of its various initiatives. This is in contrast to the traditional cooperative movements which give privilege to certain values and organizational forms even before the outcome. The paper also discusses the principles underlying microfinance and cooperatives, and then compares them before providing conclusions. Some of the conclusions are:

• Microfinance lays emphasis on efficient credit supply and recovery;
• Microfinance may end up choosing lending and recovery schemes that do not involve group-based incentives;
• Sometimes, microfinance may even do away with the notion of cooperation in small groups, and favor individual entrepreneurial advancement;
• Cooperatives place importance on the importance of cooperation among members in order to sustain their values of self-reliance and autonomy.