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on Microfinance |
| By: | Martin Valdivia (Grupo de Analisis para el Dessarrollo); Dean Karlan (Economic Growth Center, Yale University) |
| Abstract: | Can one teach entrepreneurship, or is it a fixed personal characteristic? Most academic and policy discussion on microentrepreneurs in developing countries focuses on their access to credit, and assumes their human capital to be fixed. However, a growing number of microfinance organizations are attempting to build the human capital of micro-entrepreneurs in order to improve the livelihood of their clients and help further their mission of poverty alleviation. Using a randomized control trial, we measure the marginal impact of adding business training to a Peruvian village banking program for female microentrepreneurs. Treatment groups received thirty to sixty minute entrepreneurship training sessions during their normal weekly or monthly banking meeting over a period of one to two years. Control groups remained as they were before, meeting at the same frequency but solely for making loan and savings payments. We find that the treatment led to improved business knowledge, practices and revenues. The microfinance institution also had direct benefits through higher repayment and client retention rates. Larger effects found for those that expressed less interest in training in a baseline survey have important implications for implementing similar market-based interventions with a goal of recovering costs. |
| Keywords: | entrepreneurship, microfinance, business training, business skills, adult education |
| JEL: | C93 D12 D13 D21 I21 J24 O12 |
| URL: | http://d.repec.org/n?u=RePEc:egc:wpaper:941&r=mfd |
| By: | Marek Hudon (Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels and Harvard University, Boston.) |
| Abstract: | This paper addresses the fairness of prices, with a focus on fair interest rates as they apply to microlending transactions for the poor. Under different assumptions on fairness in interest rate policies and the principles of justice as described in A Theory of Justice (Rawsl, 1976), the paper determines the extent of the ‘just’ range of a price. Using the original notion of fair reservation price and fair bargaining range, it is shown that some unfair considerations can make the fair bargaining range negative. Therefore, we propose an additional criterion for fairness: a fair distribution of the benefits within the fair bargaining range between borrowers and lenders. This new criterion is particularly useful and relevant, at minimum, for socially-minded ones active on the microfinance markets. |
| Keywords: | justice, microfinance, interest rate, principles. |
| JEL: | L31 M54 O16 Q14 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:06-015&r=mfd |