ABSTRACT
This chapter aims to understand why consumer cooperatives are difficult to finance, to identify necessity of member participation in funding on the basis of financial theory and to study the case of iCOOP on financing consumer cooperatives. It discusses existing theories about the capital of cooperatives and the capital of corporates in terms of information asymmetry respectively. The chapter explains financing from members that are used for consumer cooperatives to raise capital alternatively in terms of information asymmetry. Cooperatives have a limitation on dividends and member shares are generally non-appreciable and redeemable at face value only when members withdraw from cooperatives. An important part of studies on asymmetric information and financing is the research regarding system improvement in order to reduce information asymmetry and the costs of capital in capital markets. Consumer cooperatives may have structurally less asymmetric information between them and their members than between them and external investors.
