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on Microfinance |
| By: | Avdeenko, Alexandra; Bohne, Albrecht; Frölich, Markus; Kemper, Niels |
| Abstract: | The presentation analyzes whether the success of persuasive messages depends on an individual's behavioral bias: If at the onset of a savings period saving goals are chosen with over- or underconfidence, i.e. individuals over- or underestimate their savings potential, individuals might save too little and even stop saving altogether. Thus, given an individual's characteristics different dis- or encouraging messages might help to achieve the savings goals. The messages encourage some individuals to reconsider their self-set goal and to choose either a more ambitious or a more cautious goal. In our experiment we randomly assign moneyboxes in combination with these persuasive messages to 940 current and former clients of a microfinance institution in rural Ethiopia. Two baseline surveys and a recently collected follow-up data allow for an in-depth analysis of the mechanisms and the steps involved in the persuasive process that is likely to lead to different saving performances. |
| JEL: | D12 D91 O12 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:112982&r=mfd |
| By: | Gietzen, Thomas |
| Abstract: | This study examines the exposure of microfinance institutions to liquidity, interest rate and foreign exchange (FX) risk. It builds on a manually collected set of data on the maturity structure of assets and liabilities of the 309 largest microfinance institutions (out of which 112 actually report the maturity structure). The data suggests that, on average, microfinance institutions in the sample face virtually no liquidity risk and that exposure to FX risk is lower than generally assumed. Linking risk exposure to institutional characteristics, I find that legal status and regional affiliation are correlated to risk exposure while regulatory quality is not. |
| JEL: | G21 G32 O16 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:112935&r=mfd |
| By: | Bohne, Albrecht; Alexandra, Avdeenko; Frölich, Markus; Kemper, Niels |
| Abstract: | Limited attention may play a role in explaining the inability to reach savings goals (Karlan, McConnell, Mullainathan and Zinman, forthcoming). Presuming that attention is a scarce resource and important for the pursuit of saving plans, limits to attention in inter-temporal consumption and saving decisions may cause savers not to reach their savings goals. In turn, constant feedback on the savings performance may help to reach savings goals in the presence of limited attention. In this presentation we will draw on a simple experiment to test whether the visual representation of savings balances stimulates savings behavior and helps individuals reach their savings goals. Doing so, we randomly offer transparent and non-transparent moneyboxes as a complementary savings device to current and former clients of a microfinance organization in Ethiopia. We test whether the visual representation of saving balances via transparent money boxes increases savings and helps microfinance clients reach their savings goals. While this is our working hypothesis, we also test whether the visual representation of saving balances via transparent money boxes decreases savings (i.e. because of a higher temptation to spend money that can be seen, or because it is more difficult to hide savings from others). The hypotheses are currently under investigation as the final phase of the data-collection was completed in February 2015. |
| JEL: | D12 D91 O12 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:112915&r=mfd |
| By: | Kemper, Niels; Frölich, Markus; Naima Unte, Pia |
| Abstract: | Asymmetric information impairs the functioning of credit markets, in particular in developing countries where incomplete property rights and lack of collateral are a common joint occurrence. In such an environment financial institutions enable lending by transferring the responsibilities for the screening and monitoring of the borrowers as well as the enforcement of credit contracts, to the borrowers themselves to ease problems of asymmetric information. This comprises non-collateral based lending methodologies such as peer monitoring through co-signers (Klonner and Rai, 2010) and, especially, peer screening and monitoring in individual and joint liability group lending with the possibility to impose social sanctions (Gin and Karlan, 2014). In addition, improved personal identification through fingerprints may alleviate credit market imperfections (Gin et al., 2012). These approaches have in common that they rely on the punishment of non-compliance with credit contracts as principle enforcement mechanism, e.g. through legal action or social sanctions. They contrast with alternative mechanisms which reward compliance, rather than punishing non-compliance, with credit contracts. One example is dynamic incentives, i.e. offering bigger loans sizes to clients when the build up a positive credit history. Another example, and subject to this impact evaluation, is conditioning gratuitous insurance provision for the client through the financial institution on clients' good standing with the financial institution (clients are in good standing if they are neither in arrears nor completely defaulted on their loans). We evaluate the impact of such a conditional insurance provision on the repayment performances of microfinance clients in a Randomized Controlled Trial. The impact evaluation employs weekly data on the financial activities of roughly 22000 clients in 700 client centers from the management information system (MIS) of the microfinance institution. To evaluate the impact of the IEF on clients, we complement the weekly MIS data with weekly data on a subsample of 500 to 700 clients collected through phone surveys. |
| JEL: | D12 G21 O12 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:112927&r=mfd |
| By: | Ibanez, Marcela; Dietrich, Stephan |
| Abstract: | This paper explores the impacts of traditional agricultural insurance that offers protection against climatic shocks on small-scale tobacco farmers in Colombia after a period of substantial crop failures. Our identi cation strategy bene ts from a natural experimental setup of the form in which the insurance was launched. We fnd that tobacco producers with access to the insurance program were less likely to acquire informal loans, were less likely to use loans to repay debts, and had access to loans with lower interest rates and longer maturation periods. Moreover, access to this program was positively associated with increased savings and accumulation of liquid assets. |
| JEL: | G22 O13 O12 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:112887&r=mfd |
| By: | Czura, Kristina; Dequiedt, Vianney |
| Abstract: | Agricultural insurance does not only affect investment decisions in agriculture but also in a secondary, unrelated income earning activity that can serve as a risk mitigation and risk coping strategy, such as livestock farming. The value of insurance may depend on the market environment in the investment market for livestock: with complete livestock markets, agricultural insurance may be less valuable; with seasonal livestock markets and non-flexible decision making environments, agricultural insurance becomes more valuable. Using data from a lab-in-the-field experiment with agricultural decision makers in rural Senegal we study the effects of agricultural insurance on investments in livestock with complete and seasonal livestock markets. In general, insurance increases investment in livestock farming. There is a widespread willingness to pay for insurance but it does not react to the size of the insurance coverage. The value of insurance is higher in inflexible investment decisions indicating that insurance is more valuable in non-flexible decision making environments, such as incomplete and seasonal markets. |
| JEL: | C93 O16 O12 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:112993&r=mfd |