Context and efficiency of microfinance institutions in Benin

During the 199os, the microfinance sector, particularly mutual and cooperative financial institutions, underwent phenomenal growth in West Africa, and today, microfinance financial institutions have established a strong presence in Benin, which can be seen in their sheer numbers and in the range of activities in which they are involved, and in their relatively high territorial coverage. Despite their dynamism, financial cooperatives in Benin seem to be facing serious difficulties managing the funds collected. They operate largely in a position of excess liquidity, thus paving the way to possible agency problems, primarily between managers and members of cooperatives. In this article, we use data from the Federation des caisses d'epargne et de-credit agricole mutuel (FECECAM), the largest network of financial cooperatives in West Africa, to assess whether managers have an expense preference for unproductive expenditures. Based on the results of this assessment, we cannot conclude that there is a clear expense preference among financial cooperatives in Benin.