Surplus distribution and characteristics of social enterprises: Evidence from microfinance

• The issue of surplus distribution has hardly been analyzed in the context of the social economy.
• We highlight the main drivers of this distribution between various stakeholders of microfinance institutions (MFIs), one example of social enterprises.
• Size of the institution is the main indicator that can explain the gain in surplus and the surplus given to clients (decrease of interest rates) and staff.
• Cooperatives tend to give a greater part of their surplus to their employees.

The issue of surplus distribution has hardly been analyzed in the context of the social economy. This paper highlights the main drivers of distribution between various stakeholders of microfinance institutions (MFIs), which are an example of social enterprises. We focus on three major variables: size, governance structure and subsidies. Our results show that the size of the institution is the main indicator of the surplus that the organization keeps as a self-financial margin. Moreover, MFIs with a cooperative ownership structure allocate a larger part of their surplus to their employees, whereas non-profit organizations and shareholder-firm MFIs do not allocate their surplus in a significantly different way among their main stakeholders. Finally, we do not find any clear-cut effect of subsidies on the surplus allocation process.