nep-mfd New Economics Papers
on Microfinance
Issue of 2008‒10‒07
two papers chosen by
Olivier Dagnelie
Instituto de Analisis Economico, CSIC

  1. Wider impacts of microcredit: evidence from labor and human capital in urban Mexico By Nino-Zarazua, Miguel
  2. What Drives Household Borrowing and Credit Constraints? Evidence from Bosnia & Herzegovina By Mali Chivakul; Ke Chen Chen

  1. By: Nino-Zarazua, Miguel
    Abstract: This paper presents an estimation of the impacts of microcredit on labor and human capital following a quasi-experiment specifically designed to control for endogeneity and selection bias in the context of urban Mexico. We find important indirect trickle-down effects of credit through labor expenditure that benefit poor laborers; however, these effects were only observed when loan-supported enterprising households reached a level of income well above the poverty line. We also find significant, although small impacts of credit on children´s schooling that could be potentially reinforced by improvements in lending technology, school grants and additional ex-ante preventive and ex-post protective riskcoping products.
    Keywords: microcredit; labor; children´s schooling; Mexico
    JEL: O18 O17 C24 O16 C81 C25
    Date: 2008–09–28
  2. By: Mali Chivakul; Ke Chen Chen
    Abstract: Although Bosnia and Herzegovina (BiH) has experienced rapid growth in credit to households in recent years, most individuals are still credit constrained. This paper analyzes the determinants of household credit demand and credit constraints in BiH. To our knowledge, it is the first study on this topic employing household survey data (2001 and 2004) from Emerging Europe. Our results highlight the impact of the post-conflict and transitional nature of the country on the behavior of borrowers and lenders. As expected, age, income, wealth and education qualifications are the main factors driving credit market participation, while high income and high wealth lower credit constraints. In BiH, the probability of credit market participation peaks at 45 years old, considerably higher than in the advanced countries. At the same time, older individuals are significantly more constrained than their peers in the advanced countries. The results imply that the current credit boom may largely reflect the overall post-war demand, and indicate the worse-off position of the older generation in transition economy. Moreover, the results underscore the structural nature of unemployment as well as the mismatch between education qualifications and earning prospects in BiH. Education variables have no significant effect on the likelihood of being constrained, while, unlike in the advanced countries, being unemployed significantly increases the likelihood.
    Keywords: Bosnia and Herzegovina , Credit expansion , Credit restraint , Public debt , Education , Unemployment , Economic conditions , Interest rates , Inflation , Credit policy , Economic models , Working Paper ,
    Date: 2008–08–27

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