The Role of Local Depositors in Controlling Expenses in Small-Scale Financial Intermediation: An Empirical Analysis

摘要

Using data on Irish loan funds, a nineteenth-century quasi-bank system, we explore how the capitalstructure affects managerial agency to impact non-interest expenses. These organizations had no equityholders and were financed by deposits and 'capital', comprising donations and accumulated profits,creating problems of managerial moral hazard. Higher net income (before non-interest expenses) isassociated with higher salaries and other non-interest expenses. More surprisingly, higher 'capital'-depositratios led to higher expenses even after controlling for net income. While this institution is unique, thefindings suggest that depositors could assist in controlling expenses in microfmance organizations.