Micro-Credit and Micro-Equity: The David and the Goliath of Micro-Enterprise Financing

Economic Papers, Vol. 30, No. 4, pp. 1-11, December 2011

Posted: 3 Nov 2011

Date Written: 2009

Abstract

I argue that micro-equity may be used to complement or substitute microcredit 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.

Keywords: micro-credit, micro-equity, poverty alleviation, social return

JEL Classification: G21

Suggested Citation

Ayayi, Ayi Gavriel, Micro-Credit and Micro-Equity: The David and the Goliath of Micro-Enterprise Financing (2009). Economic Papers, Vol. 30, No. 4, pp. 1-11, December 2011, Available at SSRN: https://ssrn.com/abstract=1954101

Ayi Gavriel Ayayi (Contact Author)

Université du Québec ( email )

3351 Boulevard des Forges C.P 500
Trois Rivières, Québec G9A 5H7
Canada
819 376-5011 ext 3137 (Phone)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
544
PlumX Metrics