Record Details

Investment financing in cooperative firms

Journal of Economic & Financial Studies

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Field Value
 
Title Investment financing in cooperative firms
 
Creator Cuomo, Gaetano
 
Subject —
Cooperatives; Financing; Labour-managed firms; Portfolio diversification; Vertical integration.
G11; G31; J54.
 
Description By general agreement, one of the main obstacles to the growth of producer cooperatives is difficult investment financing, due to inadequate Capitalisation levels and the resulting inability to lodge sufficient collateral with lenders. Moreover, worker-owned firms are considered not very reliable because they suffer from problems of moral hazard and insufficient commitment. Unfortunately, the literature on this issue is not extensive and has weaknesses that are highlighted in the paper. By means of its critical analysis, it is possible to provide evidence that the funding difficulties caused by the particular structure of cooperative firms can be effectively tackled by creating an institutional framework within which cooperatives would be offered a wider range of organizational options comparable to those open to traditional enterprises. Finally, it is proved that the willingness of the members to fund the operations of their cooperative with loan capital may not be enough to mobilize external credit. For member financings to persuade potential providers of funds to place trust in a firm, third-party claims must necessarily qualify as senior debt and be repaid before the claims of the partners are settled.
 
Publisher LAR Center Press
 
Contributor —
 
Date 2015-04-27
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://journalofeconomics.org/index.php/site/article/view/154
10.18533/jefs.v3i02.154
 
Source Journal of Economic & Financial Studies; Vol 3, No 02 (2015): April; 30-40
2379-9471
2379-9463
 
Language eng
 
Relation http://journalofeconomics.org/index.php/site/article/view/154/159
 
Rights Copyright (c) 2015 Gaetano Cuomo
http://creativecommons.org/licenses/by-nc/4.0