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on Microfinance |
| By: | Britta Augsburg; Ralph De Haas; Heike Harmgart; Costas Meghir |
| Abstract: | We use an RCT to analyze the impact of microcredit on poverty reduction, child and teenage labour supply, and education. The study population consists of loan applicants to a major MFI in Bosnia who would have been rejected through regular screening. Access to credit allowed borrowers to start and expand small-scale businesses. Households that already had a business and where the borrower had more education, ran down savings, presumably to complement the loan and achieve the minimum investment amount. However, in less-educated households consumption went down. A key new finding is a substantial increase in the labor supply of children aged 16-19 year old together with a reduction in their school attendance, raising important questions about the unintended intergenerational consequences of relaxing liquidity constraints for self-employment and business creation or expansion. |
| JEL: | D1 D12 D14 G21 H52 H53 J22 J24 O16 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18538&r=mfd |
| By: | Martijn Boermans; Daan Willebrands |
| Abstract: | Financial constraints and risk taking are two well-established determinants of firm performance, however, no research analyzes how these variables are connected in the context of a high risk environment. Using data from microfinance clients in Tanzania, we derive a novel financial constraints measure and incorporate a psychometric risk taking scale. Results confirm the importance of access to finance and risk attitudes for business development. Also, we provide preliminary evidence for an interaction between financial constraints and risk taking. Financial constraints “throw sand in the wheels” and protect risk taking entrepreneurs from the negative impact of risk taking on microenterprise performance. |
| Keywords: | micro-credit; access to finance; risk attitude; entrepreneurship; Africa |
| JEL: | D22 G29 O16 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbwpp:358&r=mfd |
| By: | Pitt, Mark M.; Khandker, Shahidur R. |
| Abstract: | "The Impact of Microcredit on the Poor in Bangladesh: Revisiting the Evidence,"by David Roodman and Jonathan Morduch (2011) is the most recent of a sequence of papers and postings that seeks to refute the findings of the Pitt and Khandker (1998) article"The Impact of Group-Based Credit on Poor Households in Bangladesh: Does the Gender of Participants Matter?"that microcredit for women had significant, favorable effects on poverty reduction. In this paper the authors show that these latest Roodman and Morduch claims are based on seriously flawed econometric methods and theory and a lack of due diligence in formulating models and interpreting output from packaged software. On the basis of Roodman and Morduch's preferred two-stage least squares regression, an alternative calculation of the standard errors would lead one to conclude that the problem with Pitt and Khandker is that they underestimate the positive and statistically significant effect of women's credit on household consumption. As in their previous efforts, the methods of Roodman and Morduch are shown to bias the findings in the direction of rejecting the results of Pitt and Khandker. We also further examine two aspects of our instrumental variable approach that have been attacked by Roodman and Morduch. The first is the validity of the exclusion restrictions underlying the use of interactions between program choice and the set of exogenous variables (including the village fixed effects) as instruments. The second is the application of the"one-half acre"program eligibility rule. The authors show that identification does not require both of these, and present new results dropping each assumption in turn. The results originally reported in the Pitt and Khandker paper hold up extremely well in this new analysis. |
| Keywords: | Statistical&Mathematical Sciences,Economic Theory&Research,Econometrics,Scientific Research&Science Parks,Science Education |
| Date: | 2012–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6273&r=mfd |
| By: | Leonardo Becchetti (Università di Roma "Tor Vergata"); Stefano Castriota (Università di Roma "Tor Vergata"); Pierluigi Conzo (Università di Torino and CSEF) |
| Abstract: | The poor in developing countries are the most exposed to natural catastrophes and microfinance organizations may potentially ease their economic recovery. Yet, no evidence on MFIs strategies after natural disasters exists. We aim to fill this gap by building adataset which merges bank records of loans, issued before and after the 2004 Tsunami by a Sri Lankan MFI recapitalized by Western donors, with detailed survey data on the corresponding borrowers. Evidence of effective post-calamity intervention is supported since the defaults in the post-Tsunami years (2004-2006) do not imply smaller loans in the period following the recovery (2007-2011) while people hit by the calamity receive more money. Furthermore, a cross-subsidization mechanism is in place: clients with a long successful credit history and those not damaged by the calamity pay higher interest rates. All these features helped damaged people to recover and repay both new and previous loans. However, we also document an abnormal and significant increase in default rates of non victims suggesting the existence of contagion and/or strategic default problems. For this reason we suggest reconversion of donor aid into financial support to compulsory microinsurance schemes for borrowers. |
| Keywords: | Tsunami, disaster recovery, microfinance, strategic default, contagion, microinsurance. |
| JEL: | G21 G32 G33 |
| Date: | 2012–10–25 |
| URL: | http://d.repec.org/n?u=RePEc:sef:csefwp:324&r=mfd |
| By: | Dean Karlan (Economic Growth Center, Yale University); Christopher Udry (Economic Growth Center, Yale University); Isaac Osei-Akoto (University of Ghana, Legon); Robert Darko Osei (University of Ghana, Legon) |
| Abstract: | The investment decisions of small-scale farmers in developing countries are conditioned by their financial environment. Binding credit market constraints and incomplete insurance can reduce investment in activities with high expected profits. We conducted several experiments in northern Ghana in which farmers were randomly assigned to receive cash grants, grants of or opportunities to purchase rainfall index insurance, or a combination of the two. Demand for index insurance is strong, and insurance leads to significantly larger agricultural investment and riskier production choices in agriculture. The salient constraint to farmer investment is uninsured risk: when provided with insurance against the primary catastrophic risk they face, farmers are able to find resources to increase expenditure on their farms. Demand for insurance in subsequent years is strongly increasing in a farmer’s own receipt of insurance payouts, and with the receipt of payouts by others in the farmer’s social network. Both investment patterns and the demand for index insurance are consistent with the presence of important basis risk associated with the index insurance, and with imperfect trust that promised payouts will be delivered. |
| Keywords: | agriculture, insurance markets, credit markets, risk, underinvestment, misallocation |
| JEL: | C93 D24 D92 G22 O12 O13 O16 Q12 Q14 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:egc:wpaper:1019&r=mfd |
| By: | Binagwaho, Agnes; Hartwig, Renate; Ingeri, Denyse; Makaka, Andrew |
| Abstract: | Rwanda is among the few countries in Sub-Saharan Africa and the developing approaching universal health insurance coverage. To date, over 90 per cent of the population are enrolled in the Mutuelles de Santé - a system that started off from a number of stand-alone community based health insurance schemes and gradually evolved into a unified social health insurance plan. The country has also made remarkable progress in ameliorating child health, particularly since 2005, which coincides with the year when the Mutuelles de Santé was standardised and raises the question to what extent the insurance scheme did contribute to the observed improvements. In order to address this issue we conduct a quantitative impact evaluation using nationally representative micro-data from the 2005 and 2010 Rwandan Demographic and Health Surveys (RDHSs) and also consider potential channels from which improvements could originate. Our results suggest the following: The Mutuelles de Santé improves access to preventative and curative health services. Insured households are more sensitive to health issues, in the sense that they are more inclined to use bed nets and ensure safe drinking water. Despite a weak effect on health outcomes overall, the insurance scheme seems to have contributed to improvements in stunting and mortality, at the critical ages (before the age of two). -- |
| Keywords: | Health Insurance,Child Health,Mutuelles de Santé,Rwanda |
| JEL: | I11 I38 J13 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:upadvr:v6612&r=mfd |
| By: | Quibria, M.G. |
| Abstract: | This paper explores the relationship between microcredit and poverty reduction. To investigate this question, we posit a bare-bone, household model that outlines the economic environment within which various types of family microenterprises operate. It hi |
| Keywords: | microcredit, poverty reduction, labour market, and intra-household decision-making |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp2012-78&r=mfd |
| By: | Vitalie Bumacov (Chaire Banque Populaire en Microfinance du Groupe ESC Dijon Bourgogne - Commencez à saisir le nom d'un établissement); Olivier Toutain (CEREN - Centre de Recherche sur l'Entreprise - Start entering a institution, university, grande ecole); Arvind Ashta (Chaire Banque Populaire en Microfinance du Groupe ESC Dijon Bourgogne - Commencez à saisir le nom d'un établissement, CEREN - Centre de Recherche sur l'Entreprise - Start entering a institution, university, grande ecole) |
| Abstract: | En France on parle beaucoup de l'accompagnement des micro-emprunteurs sur la durée de remboursement des microcrédits qu'ils reçoivent auprès des institutions de microfinance (IMF). Souvent indissociable du processus de financement, cet accompagnement financier suppose une prise en charge de l'emprunteur par une ou plusieurs personnes considérées comme qualifiées pour apporter une aide personnalisée au meneur du projet financé afin qu'il ne mette pas en danger son patrimoine, augmente ses chances de réussite et conserve sa capacité de remboursement. Cette étude à pour objectif d'analyser ce phénomène qui n'est pas commun aux pratiques de la microfinance observées dans les pays émergents et même dans certains pays développés. En utilisant le concept de facteurs de production, des données qualitatives primaires et secondaires, l'étude cherche à quantifier l'importance de l'accompagnement financier pour les bénéficiaires de microcrédits professionnels en France. |
| Keywords: | micro-emprunteur, microfinance, accompagnement, IMF, facteur de production, pauvreté |
| Date: | 2012–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00752493&r=mfd |