| Abstract: |
The poor need a range of financial services to cope with shocks, to manage
day-to-day transactions, and to grasp business opportunities, among others. To
be successful in reaching the poor, microfinance institutions should offer
products that meet the poor’s needs. Product design, therefore, is becoming a
very important topic. “Behavioral” product design pinpoints the importance of
individuals’ behavioral anomalies, such as procrastination behavior and lack
of self-control. Financial products are seen as commitment devices to help
individuals diverting money from immediate consumption to savings and
investment.<p>This doctoral thesis contributes to this recent research stream
by first surveying the literature on product design in microfinance, and then
providing an empirical and a theoretical contribution. Precisely, the thesis
is structured in four chapters. Chapter 1 and Chapter 2 are both reviewing the
literature. Chapter 1, titled “Product Flexibility in Microfinance: A Survey”,
reviews the academic literature on product flexibility in microfinance and
offers a categorization scheme of flexible microfinance products. Chapter 2,
titled “Innovative Flexible Products in Microfinance”, scrutinizes nine
real-life practices covering microcredit, micro-savings and micro-insurance
services that mix flexible features and commitment devices. Chapter 3, titled
“The Debt Puzzle in Dhaka’s Slums: Do Liquidity Needs Explain Co-Holding?”,
examines the use of flexible savings-and-loan accounts by SafeSave’s clients
and tests whether the need for liquidity explains why the poor save and borrow
simultaneously. Lastly, Chapter 4, titled “Having it Both Ways: A Theory of
the Banking Firm with Time-consistent and Time-inconsistent Depositors,”
proposes a theoretical model to determine the liquidity premium offered by a
monopolistic bank to a pool of depositors composed of time-consistent and
time-inconsistent agents. |