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on Microfinance |
| By: | Karlan, Dean S.; Zinman, Jonathan |
| Abstract: | Microcredit seeks to promote business growth and improve well-being by expanding access to credit. We use a field experiment and follow-up survey to measure impacts of a credit expansion for microentrepreneurs in Manila. The effects are diffuse, heterogeneous, and surprising. Although there is some evidence that profits increase, the mechanism seems to be that businesses shrink by shedding unproductive workers. Overall, borrowing households substitute away from labor (in both family and outside businesses), and into education. We also find substitution away from formal insurance, along with increases in access to informal risk-sharing mechanisms. Our treatment effects are stronger for groups that are not typically targeted by microlenders: male and higher-income entrepreneurs. In all, our results suggest that microcredit works broadly through risk management and investment at the household level, rather than directly through the targeted businesses. |
| Keywords: | formal finance; informal finance; microcredit; microentreprenuership; microfinance; risk sharing |
| JEL: | D1 D2 G2 O2 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7396&r=mfd |
| By: | Vittoria Cerasi (Department of Statistics, Università degli Studi di Milano-Bicocca); Lucia Dalla Pellegrina (Department of Statistics, Università degli Studi di Milano-Bicocca) |
| Abstract: | In this paper we analyse the role of peers' solidarity in fostering investment in production in the context of micro?nance. When there is asymmetric information between lenders and borrowers on the use of borrowed funds and loans are not collateralized, there is a high chance that borrowers use loans for current consumption sacrifying productive projects. We study the effect of solidarity in the form of insurance from a network of relatives on borrowers' intertemporal preference for consumption and its impact on myopic behavior. The main result of the model is that solidarity might increase the share of funds devoted to investment but it might also reduce the amount of the loan in equilibrium. This result is in accordance with several features of micro-lending. We test the model using survey data from the World Bank on a sample of households in Bangladesh during the period 1991-1992. Empirical fi?ndings support the predictions of the model. |
| Keywords: | Microfinance, credit rationing, social networks |
| JEL: | O16 O17 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:mis:wpaper:20091101&r=mfd |
| By: | Beck, Thorsten; Behr, Patrick; Güttler, Andre |
| Abstract: | We analyze gender differences associated with loan officer performance. Using a unique data set for a commercial bank in Albania over the period 1996 to 2006, we find that loans screened and monitored by female loan officers show statistically and economically significant lower default rates than loans handled by male loan officers. This effect comes in addition to a lower default rate of female borrowers and cannot be explained by sample selection, overconfidence of male loan officers or experience differences between female and male loan officers. Our results seem to be driven by differences in monitoring, as loan officers of different gender do not seem to screen borrowers differently based on observable borrower characteristics. This suggests that gender indeed matters in banking. |
| Keywords: | Behavioral banking; gender; loan default; loan officers; monitoring; screening |
| JEL: | G21 J16 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7409&r=mfd |
| By: | Beck, Thorsten; Büyükkarabacak, Berrak; Rioja, Felix; Valev, Neven |
| Abstract: | While theory predicts different effects of household credit and enterprise credit on the economy, the empirical literature has mainly used aggregate measures of overall bank lending to the private sector. We construct a new dataset from 45 developed and developing countries, decomposing bank lending into lending to enterprises and lending to households and assess the different effects of these two components on real sector outcomes. We find that: 1) enterprise credit raises economic growth whereas household credit has no effect; 2) enterprise credit reduces income inequality whereas household credit has no effect; and 3) household credit is negatively associated with excess consumption sensitivity, while there is no relationship between enterprise credit and excess consumption sensitivity. |
| Keywords: | Financial intermediation; Firm credit; Household credit |
| JEL: | D14 G21 G28 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7400&r=mfd |