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on Microfinance |
| By: | Veronica Frisancho; Dean Karlan; Martin Valdivia |
| Abstract: | We measure the impact of a business training program for female microentrepreneur clients of a group banking program in Peru. Using the credit with education model, we assigned clients randomly to either treatment or control groups. Treatment groups received thirty to sixty minute entrepreneurship training sessions during their normal weekly group banking meeting. These lasted between one to two years. Control groups remained as they were before, meeting weekly with the group banking program solely for making loan and savings payments. We find that intention to treat (ITT) led to higher repayment and client retention rates for the microfinance institution, improved business knowledge, and practices. More importantly, average business sales revenues also increase while revenues fluctuations were reduced. In addition, we find significant heterogeneity in the exposure of clients within the treatment group. Treatment on the treated (TOT) estimates, obtained using ITT as instrumental variable, show substantially larger effects. |
| Keywords: | Microfinance, business training, adult education |
| JEL: | C93 D12 D13 D21 I21 J24 O12 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:pmmacr:2008-11&r=mfd |
| By: | Cull, Robert; Demirguc-Kunt, Asli; Morduch, Jonathan |
| Abstract: | Microfinance institutions have proved the possibility of providing reliable banking services to poor customers. Their second aim is to do so in a commercially-viable way. This paper analyzes the tensions and opportunities of microfinance as it embraces the market, drawing on a data set that includes 346 of the world's leading microfinance institutions and covers nearly 18 million active borrowers. The data show remarkable successes in maintaining high rates of loan repayment, but the data also suggest that profit-maximizing investors would have limited interest in most of the institutions that are focusing on the poorest customers and women. Those institutions, as a group, charge their customers the highest fees in the sample but also face particularly high transaction costs, in part due to small transaction sizes. Innovations to overcome the well-known problems of asymmetric information in financial markets were a triumph, but further innovation is needed to overcome the challenges of high costs. |
| Keywords: | Access to Finance,Debt Markets,,Banks&Banking Reform,Emerging Markets |
| Date: | 2008–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4630&r=mfd |
| By: | de Mel, Suresh; McKenzie, David; Woodruff, Christopher |
| Abstract: | Is the vast army of the self-employed in low income countries a source of employment generation? This paper uses data from surveys in Sri Lanka to compare the characteristics of own account workers (non-employers) with wage workers and with owners of larger firms. The authors use a rich set of measures of background, ability, and attitudes, including lottery experiments measuring risk attitudes. Consistent with the International Labor Organization's views of the self employed (represented by Tokman), the analysis finds that two-thirds to three-quarters of the own account workers have characteristics which are more like wage workers than larger firm owners. This suggests the majority of the own account workers are unlikely to become employers. Using a two and a half year panel of enterprises, the authors show that the minority of own account workers who are more like larger firm owners are more likely to expand by adding paid employees. The results suggest that finance is not the sole constraint to growth of microenterprises, and provides an explanation for the low rates of growth of enterprises supported by microlending. |
| Keywords: | Labor Markets,Tertiary Education,Work&Working Conditions,,Microfinance |
| Date: | 2008–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4635&r=mfd |
| By: | Djankov, Simeon; Miranda, Pedro; Seira, Enrique; Sharma, Siddharth |
| Abstract: | This paper uses nationally representative survey data from Mexico to compare households with savings accounts in formal financial institutions to their neighbors who do not have such accounts. The survey, which was conducted in 2005, contains information on nearly 5,000 households. The findings show that although neighboring banked and unbanked households have similar demographic and occupational profiles, the former are more educated and have markedly greater wealth. The median banked household spends 32 percent more per capita than the median unbanked household, and the median per capita wealth in banked households is 88 percent higher than that in unbanked households. The findings suggest that education levels, wealth, and unobserved household attributes that might be correlated with wealth and education play a major role in explaining who is banked. |
| Keywords: | Access to Finance,,Banks&Banking Reform,Emerging Markets,Debt Markets |
| Date: | 2008–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4647&r=mfd |
| By: | Kinda, Tidiane; Loening, Josef L. |
| Abstract: | This paper analyzes characteristics of nonfarm enterprises, their employment growth patterns, and constraints in doing business in rural Tanzania. Using unique survey data, the authors describe a low-return sector struggling to compete in a difficult business environment. However, about one-third of rural enterprises are growing fast. Most enterprises engage in agricultural trade. Due to a rapidly growing agricultural sector in recent years, limiting demand-side constraints, rural enterprise constraints in Tanzania mainly operate from the supply side. This suggests that, in particular, access to finance, road infrastructure, and rural cell phone communication is correlated with employment growth. A major finding is that subjective and objective measurements of business constraints are broadly comparable. The authors discuss a number of factors that would help to unleash the full potential of private sector-led growth in rural areas. The findings show that marginal improvements in the rural investment climate matter for growth. |
| Keywords: | Access to Finance,Rural Poverty Reduction,Microfinance,Banks&Banking Reform, |
| Date: | 2008–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4675&r=mfd |
| By: | Osgood, Daniel E.; Suarez, Pablo; Hansen, James; Carriquiry, Miguel; Mishra, Ashok |
| Abstract: | Climate variability poses a severe threat to subsistence farmers in southern Africa. Two different approaches have emerged in recent years to address these threats: the use of seasonal precipitation forecasts for risk reduction (for example, choosing seed varieties that can perform well for expected rainfall conditions), and the use of innovative financial instruments for risk sharing (for example, index-based weather insurance bundled to microcredit for agricultural inputs). So far these two approaches have remained entirely separated. This paper explores the integration of seasonal forecasts into an ongoing pilot insurance scheme for smallholder farmers in Malawi. The authors propose a model that adjusts the amount of high-yield agricultural inputs given to farmers to favorable or unfavorable rainfall conditions expected for the season. Simulation results - combining climatic, agricultural, and financial models - indicate that this approach substantially increases production in La Niña years (when droughts are very unlikely for the study area), and reduces losses in El Niño years (when insufficient rainfall often damages crops). Cumulative gross revenues are more than twice as large for the proposed scheme, given modeling assumptions. The resulting accumulation of wealth can reduce long-term vulnerability to drought for participating farmers. Conclusions highlight the potential of this approach for adaptation to climate variability and change in southern Africa. |
| Keywords: | Hazard Risk Management,Debt Markets,,Rural Poverty Reduction,Banks&Banking Reform |
| Date: | 2008–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4651&r=mfd |