nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2022‒12‒19
three papers chosen by

  1. Lending and monitoring: Big Tech vs Banks By Bouvard, Matthieu; Casamatta, Catherine; Xiong, Rui
  2. Mobile money and household consumption volatility By Ablam Estel Apeti

  1. By: Bouvard, Matthieu; Casamatta, Catherine; Xiong, Rui
    Abstract: We show that by lending to merchants and monitoring them, an e-commerce platform can price-discriminate between merchants with high and low financial constraints: the platform offers credit priced below market rates and designed to select merchants with lower capital or collateral while simultaneously increasing the platform’s access fees. The credit market then becomes endogenously segmented with banks focusing on less financially constrained borrowers. Lending by the platform expands with its monitoring efficiency but can arise even when the platform is less efficient than banks at monitoring. Platform credit benefits more financially constrained merchants as well as buyers, but can hurt less financially constrained merchants if cross-side network effects with buyers are too small. The platform’s propensity to offer credit and the financial inclusion of more constrained merchants depends on the platform’s market power.
    Keywords: Big Tech; banks; two-sided markets; financial constraints; financial inclusion;; market power
    Date: 2022–11
  2. By: Ablam Estel Apeti (CERDI - Centre d'Études et de Recherches sur le Développement International - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne)
    Abstract: Access to financial services plays an important role in household welfare, as it provides access to investment opportunities, savings, consumption smoothing, and insurance against unexpected shocks. In developing economies where formal financial services exclude nearly half of the population, the development of mobile cellular offers an exciting avenue to provide poor households with access to basic financial services through mobile money. In this study, we analyze the effect of this financial innovation, i.e., mobile money, on household consumption volatility. Our results show that mobile money reduces household consumption volatility. Finally, we identify financial inclusion and migrant remittances as potential major transmission channels.
    Abstract: L'accès aux services financiers joue un rôle important dans le bien-être des ménages, car il permet d'accéder à des opportunités d'investissement, d'épargne, de lissage de la consommation et d'assurance contre des événements inattendus. Dans les économies en développement où les services financiers formels excluent près de la moitié de la population, le développement de la téléphonie mobile donne une opportunité aux ménages pauvres d'accéder aux services financiers de base par le mobile money. Dans cette étude, nous analysons l'effet de cette innovation financière, c'est-à-dire le mobile money, sur la volatilité de la consommation des ménages. Nos résultats soulignent qu'elle réduit cette volatilité. Pour expliquer ce résultat, nous identifions l'inclusion financière et les transferts des migrants comme de potentiels canaux de transmission majeurs.
    Keywords: Mobile money services,Mobile money,Volatilité,Pays en dévelopement,Consommation des ménages
    Date: 2022–11–10
  3. By: Loyd Sungirirai; Henry Gurajena; Grace Gaolawole
    Abstract: Botswana's housing finance sector has undergone substantial transformations and growth over the past two decades from a relatively small banking sector dominated by commercial banks to ten commercial banks, four investment banks, two state-owned development finance organisations and one building society. The main aim of this research is to investigate available options for raising housing finance for low-income earners in Botswana. The study of this nature is important for the housing finance sector which is mostly represented by the banking sector as the formal system of housing finance, mostly through mortgage finance (Tomlison, 2006). According to (Tomlison, 2006) those that cannot afford a mortgage loan will at least be able to house themselves incrementally through the construction of houses. The study target population constituted the formally registered SACCOS and a sample from Gaborone was drawn for the semi-structured questionnaire which was utilised. The quantitive research approach used descriptive statistics to analyse the findings of this study. The research findings supports the noon that non-bank and informal finance systems provide small loans and small savings for housing finance. The informal systems include group-based savings collections such as Savings and Credit Cooperative Society (SACCOS), Internal Savings and Lending Schemes (ISLES) and microfinance firms that cover a wide range of community needs. ISLES serve economic and social purposes.SACCOS are an extension of Rotang Savings and Credi tAssociaon (ROSCAS). In Botswana, ISLES exist in various names depending with the community they are commonly popular amongst all and are referred to as motshelo, mahodisano in Setswana, and stokvels - membership is by individual periodic payments which can be weekly or monthly payment with an arrangement of peer lending and is different from microcredit but operate almost in the same way. This arrangement provide a safe financial inclusion especially for those in informal employment.
    JEL: R3
    Date: 2022–01–01

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