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on Microfinance |
| By: | Mallick, Iftekhar |
| Abstract: | Microfinance has, by now, reached a total of over 60% of all poor households of Bangladesh, and 37% of all households (World Bank, 2005). There are, however some controversies relating to the indebtedness for the microfinance receivers and the contribution of microfinance in their socioeconomic conditions. Some say it is making poor people debt trapped, on the other hand, some say it is benefitting the poor. Well, there are no polar extremes. Throughout this paper we will be examining, to which extent the arguments are feasible, and finally develop some measures to increase the performance of microfinance. |
| Keywords: | Microfinance; Finance; Bangladesh; Development |
| JEL: | Q01 R11 R5 G21 |
| Date: | 2012–06–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:39038&r=mfd |
| By: | Renuka Sane (Indira Gandhi Institute of Development Research); Susan Thomas (Indira Gandhi Institute of Development ResearchInstitute of Economic Growth) |
| Abstract: | Recent events in India have brought a fresh focus on the appropriate regulatory stance towards micro-finance. In this paper, we review facts and recent experience about Indian microfinance. We analyse the puzzles of financial regulation in this field from first principles, and argue that the mainstream mechanisms of consumer protection and micro-prudential regulation need to be modified owing to joint-liability groups. From this perspective, we suggest regulatory strategies that need to be adopted for dealing with micro-credit and financial distribution that focuses on the poor. This analysis and conceptual framework also helps analyse the two policy responses till date, the Malegam report and the draft Microfinance Bill, 2011. |
| Keywords: | Micro-finance, micro-credit, joint-liability-groups, India, consumer protection, regulation |
| JEL: | G20 G21 G28 |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:ind:igiwpp:2012-012&r=mfd |
| By: | Hernandez-Hernandez, Emilio; Schreiner, Mark |
| Abstract: | This article presents a practical methodology to monitor poverty changes among microfinance clients using available household panel data. As an example, it presents an estimation of the net number of people that rose above the $1/day poverty line while members of Grameen Bank and BRAC during 1990 to 2006. The proposed method contributes to on-going efforts from microfinance practitioners to verify whether their clients are moving out of poverty and validate management strategies aiming to target new poor clients, and increase their share of poor clients over time. Estimates show that about 6.6 million people rose above the $1/day poverty line in 1990-2006 while members of Grameen or BRAC. This represents about 40 percent of the total number of poor people that crossed this poverty line during the same time period at the national level, which validates targeting strategies to reach the poor. |
| Keywords: | Microfinance; poverty reduction; poverty monitoring; Bangaldesh |
| JEL: | E21 D14 B41 |
| Date: | 2012–01–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:38977&r=mfd |
| By: | Mas, Ignacio; Klein, Michael |
| Abstract: | Across the world mobile money schemes are being launched. In such schemes financial service providers interact with clients via mobile phones or other mobile devices such as tablets. Service offerings include payments and saving as well as basic insurance products and sometimes credit based on scoring methods that use information about the client’s payment history. The world of mobile money is still in the experimental stage. Some schemes like M-PESA in Kenya have, at least initially, been run-away successes. Some three quarters of all adults in Kenya signed up within little over four years after M-PESA was launched. Other schemes in Kenya and elsewhere have produced more modest results. Yet the promise of mobile financial services is sufficiently strong for currently over 200 mobile deployments counting just the cellphone based ones. Much experimentation is still needed to find the best business models. Hence room for such experimentation is desirable. At the same time policymakers and regulators need to be clear about possible ramifications of the mobile revolution for the design of financial regulation and its implementation. This note discusses several systemic issues that arise from mobile payment schemes: The impact of “e-money” on money supply, problems posed by financial distress of mobile money schemes, and the impact of mobile money schemes on money-laundering and illicit finance -- |
| JEL: | G21 G28 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fsfmwp:188&r=mfd |
| By: | Dufhues, Thomas; Buchenrieder, Gertrud; Munkung, Nuchanata |
| Abstract: | This study shows how different forms of individual social capital affect access to formal credit in rural Thailand. In the context of agriculture economics, an innovative data collection approach is used that originates from the field of sociology (personal network survey). We measure social capital according to: 1. the tie strength between the respondent and the personal network member (bonding/bridging); and 2. the social distance between the respondent and the personal network member (linking). Strong ties (bonding) in combination with access to socially distant network members (linking) reduce the chances of being access-constrained. |
| Keywords: | Thailand, access to credit, social capital, personal networks, Agricultural Finance, Research Methods/ Statistical Methods, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae12:123401&r=mfd |
| By: | Nunoo, Jacob; Andoh, Francis K. |
| Abstract: | Promoting a dynamic operating environment for Small Medium scale enterprises (SMEs) is seen as a priority amongst economic development goals, in both developed and emerging economies. SMEs are a primary driver for job creation and GDP growth. They greatly contribute to economic diversification and social stability and they play an important role for private sector development. It must be emphasized, that the utilization of these financial products does not only promote the growth of the SMEs themselves but also their active participation in the financial services market leads to financial development which is widely recognized as an important determinant of economic growth and also recognized as important for enhancing the social and economic impact of the financial sector. In the past, SMEs, particularly, in developing countries, lacked access to financial products and services. The SME market was perceived by banks as risky, costly, and difficult to serve. However, with the advances in information and communications technology, the cost differential of serving poor customers has fallen and banks now perceive significant opportunities in the SME sector. Survey data from multiple studies show that banks have begun to target SMEs as a profitable segment. For example, a recent survey of 91 banks in 45developed and developing countries – Bank Financing for SMEs around the World – found that these banks overwhelmingly perceived the SME sector as a large market with good prospects. There exists an array of financial products - microcredit, savings, and loans, insurance, mutual funds, etc. – in both the formal and informal sectors in Ghana. Opportunities to utilize these financial services are now plentiful than about a decade ago. However, available studies have shown that about 44% of Ghanaians are financially excluded and have/use no financial products. This paper uses a direct measure of financial knowledge to empirically investigate the linkage between financial literacy and utilization of financial services by SMEs. However, since people’s level of knowledge can improve through utilization of financial service, we establish a bi-causality problem. In the analysis, two equations were estimated: (1) financial literacy level, and (2) utilization of financial service which includes financial literacy as an endogenous variable. The equation determining the level of financial literacy was estimated using the OLS while the equation for the utilisation of financial service was estimated using logistic regression. The IV method was used to correct for the problem of endogeneity. Overall, the results show that there was modest level of financial literacy among small and medium entrepreneurs in Ghana. Moreover, it was discovered that the better and more financially literate entrepreneurs were more likely to utilize financial service. The most commonly utilized financial service was operating a bank account. This has important policy implication. Finally, the instrument for financial literacy, recipient of financial education, also had positive relationship with utilization of financial service. |
| Keywords: | small and medium scale enterprises, financial literacy, utilization, Agricultural Finance, Financial Economics, Research Methods/ Statistical Methods, Q14, M20, |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea12:123418&r=mfd |
| By: | John Gibson (University of Waikato); David McKenzie (World Bank); Bilal Zia (World Bank) |
| Abstract: | Remittances are a major source of external finance for many developing countries but the cost of sending remittances remains high for many migration corridors. International efforts to lower costs by facilitating the entry of new financial products and new cost comparison information sources rely heavily on the financial literacy of migrants. This paper presents the results of a randomized experiment designed to measure the impact of providing financial literacy training to migrants. Training appears to increase financial knowledge and information seeking behavior and reduces the risk of switching to costlier remittance products but does not change either the frequency or level of remittances. |
| Keywords: | Financial literacy; Remittances; Migration. |
| JEL: | F24 O12 C93 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:1216&r=mfd |
| By: | Liu, Yanyan; Myers, Robert J. |
| Abstract: | Low demand for micro-insurance has been a prominent problem in developing countries. We study the dynamics of insurance demand by risk-averse farmers who can borrow and lend subject to a credit constraint and who also perceive a risk of insurer default. Credit constraints and the possibility of insurer default both reduce the demand for insurance. We then propose an alternative insurance design that allows farmers to enter an insurance contract while delaying payment of the premium until the end of the insured period. We show how this alternative design can increase insurance take-up by relaxing the liquidity constraint and assuaging farmers' concerns about insurer default. We also investigate the effects of the associated problem of farmers reneging on their delayed premium payment if the insured event does not occur. |
| Keywords: | Insurance, Agricultural, delayed premium payment, insurance demand, liquidity constraint, insurer default, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:1174&r=mfd |