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on Microfinance |
| By: | Römer, Ulf; Mußhoff, Oliver |
| Abstract: | [Purpose] In recent years, the application of credit scoring in urban microfinance institutions became popular, while rural microfinance institutions, which mainly lend to agricultural clients, are hesitating to adopt credit scoring. The present study aims to explore whether microfinance credit scoring models are suitable for agricultural clients, and if such models can be improved for agricultural clients by accounting for precipitation. [...] |
| Keywords: | Microfinance,Credit scoring,Agricultural credit,Precipitation |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:daredp:1703&r=mfd |
| By: | Abay, Kibrom A.; Koru, Bethlehem; Abate, Gashaw T.; Berhane, Guush |
| Abstract: | What is the optimal size and composition of Rural Financial Cooperatives (RFCs)? With this broad question in mind, we characterize alternative formation of RFCs and their implications in improving the access of rural households to financial services, including savings, credit, and insurance services. We find that some features of RFCs have varying implications for delivering various financial services. The size of RFCs is found to have a nonlinear relationship with the various financial services RFCs provide. We also show that compositional heterogeneity among members, including diversity in wealth, is associated with higher access to credit services, while this has little implication on households’ savings behavior. Similarly, social cohesion among members is strongly associated with higher access to financial services. These empirical descriptions suggest that the optimal size and composition of RFCs may vary across the domains of financial services they are designed to facilitate. This evidence provides suggestive insights on how to ensure financial inclusion among smallholders, a pressing agenda and priority of policy makers in developing countries, including Ethiopia. The results also provide some insights into rural microfinance operations which are striving to satisfy members’ demand for financial services. |
| Keywords: | ETHIOPIA, EAST AFRICA, AFRICA SOUTH OF SAHARA, AFRICA,finance, economic development, rural finance, Rural financial cooperatives, compositional heterogeneity, wealth diversity, social cohesion |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:esspwp:100&r=mfd |
| By: | Mohamed El Komi (Durham University); Mona Said (American University in Egypt) |
| Abstract: | As a result of the economic meltdown in 2008, the hardest hit sector of the economy was the micro and small enterprises (MSE’s) sector. MSEs’ access to formal finance has been facing increasing restrictions, due to the adoption of more cautious lending strategies by both public and private banks. Hence, MSEs in Egypt still heavily rely on informal credit to finance their operations. This paper identifies the linkages between different sources of finance and their impact on informality of MSEs based on small scale surveys on credit and labor use in household businesses in villages in two governorates in Egypt. Preliminary analysis of this new data confirms that relying on self-finance is associated with increased informality of the surveyed enterprises in both governorate subsamples, whereas access to formal loans is associated with formalization through enterprise registration in non-agricultural enterprises surveyed in one of the governorates. These results provide preliminary evidence that policies that enhance access to formal credit and attempts to formalize informal sources of credit, such as RoSCAs, are likely to impact MSE’s formalization positively in Egypt. |
| Date: | 2017–03–30 |
| URL: | http://d.repec.org/n?u=RePEc:erg:wpaper:1074&r=mfd |
| By: | Römer, Ulf; Weber, Ron; Mußhoff, Oliver; Turvey, Calcum G. |
| Abstract: | The prevention of asymmetric information plays a major role in successful small business lending. The purpose of this research is to determine if small business applicants report their income information correctly when requesting a loan. Therefore, a randomized controlled trial bogus pipeline experiment was set up during a typical cash-flow analysis of a bank for small businesses in the Philippines. Results indicate that loan applicants of the treatment group reported a lower income, an effect which is most pronounced in the lowest income percentile. Moreover, our analyses reveal higher loan delinquencies in the control group. |
| Keywords: | Small business finance,Income reporting,Asymmetric information,Bogus pipeline,Randomized controlled trial |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:daredp:1702&r=mfd |
| By: | Jang, Jong-Moon (Korea Institute for International Economic Policy); Park , Hyunju (Korea Institute for International Economic Policy) |
| Abstract: | Africa is currently rising as a major area where mobile money is spreading. According to the 2015 global index report by the World Bank, the 13 countries whose penetration rate for mobile money accounts was over 10% were all located in sub-Saharan Africa. The example of Africa's mobile money diffusion is assessed as meaningful creation of new services from local African demand. The mobile money of Africa was known as first serviced in South Africa in the year 2000, and its full-fledged expansion is recognized as subsequent to the great success of Kenyan mobile communication operator Safari.com due to M-Pesa in 2007. Mobile money is currently supplied centering in the East Africa region including Kenya, Tanzania, Somalia, and Sudan, and also displays a high penetration rate in Cote d'Ivoire and South Africa. The background to the fast spread of mobile money in Africa includes low financial access, quickly diffusing mobile communications infrastructure, and the quick response of corporations to local demand. The proportion of the adult population who can use orthodox financial institutions excluding mobile finance in sub-Saharan Africa is just 24%, but the diffusion of mobile communications is 70%. Multinational corporations like Vodafone paid attention to the informal financial dealings between individuals in Africa and released a new service that could replace them. The mobile money system, M-Pesa, which began in Kenya, is a typical example of success and pioneering, which has had a ripple effect on not only countries nearby but also other sub-Saharan countries, although there are examples of mobile money diffusion failure like Nigeria. In the case of Nigeria, a cash-oriented economic structure and the excessive regulations of the government are pointed out as the biggest causes for the failure of diffusion. The diffusion of mobile money in Africa display differing aspects according to region and country. Mobile money was a success in the East Africa region including Kenya because of the complex functioning of several factors including the efficient institutions of each government, the peculiarity of the financial environment, and consumer demand. Local market analysis must precede to revitalize FinTech domestically and enter overseas markets. As you may see from the case of Africa, the diffusion of mobile money, unlike a top-down transmission of technology, tends to begin with local demand, so a close analysis on the demand and institutions of the local market must be preceded. |
| Keywords: | FinTech; Mobile Money; M-Pesa; Sub-Saharan Africa; Kenya |
| Date: | 2016–01–29 |
| URL: | http://d.repec.org/n?u=RePEc:ris:kiepwe:2016_003&r=mfd |