New Economics Papers
on Microfinance
Issue of 2010‒03‒13
three papers chosen by
Aastha Pudasainee and Olivier Dagnelie

  1. Perspectives and a Quantitative Model for Structured Microfinance By Gregor Dorfleitner; Christopher Priberny
  2. Theory of Social Returns in Portfolio Choice with Application to Microfinance By Gregor Dorfleitner; Michaela Leidl; Johannes Reeder
  3. The Global Economic Crisis: An Opportunity for Strengthening Asia's Social Protection Systems? By Asher, Mukul

  1. By: Gregor Dorfleitner (Department of Finance, University of Regensburg, Germany); Christopher Priberny (Department of Finance, University of Regensburg, Germany)
    Abstract: We study the perspectives and develop a quantitative model for structured microfinance instruments, which have suffered as a result of the financial crisis of 2008/2009. A survey addressed to relevant world-wide experts on microfinance shows that structured instruments are still regarded as an important means for refinancing microfinance institutions in the future. In a second step we introduce a quantitative credit risk model that takes into account the peculiarities of microfinance institutions and can be used for pricing purposes and analyzing the risk inherence in different tranches of a structured microfinance vehicle. In a realistic application we check the robustness and demonstrate the advantages of the model presented.
    Date: 2010–02
  2. By: Gregor Dorfleitner (University of Regensburg, Germany); Michaela Leidl (University of Regensburg, Germany); Johannes Reeder (University of Regensburg, Germany)
    Abstract: We complement standard portfolio theory à la Markowitz by adding a social dimension. We distinguish between two main setups, taking social returns as stochastic in the first, but as deterministic in the second. Two main features need to be introduced: Every asset must be assigned a (distribution of) social return(s), and the investor has to cherish social returns. The former comes with measurement problems, whereas the latter is mainly a problem of choice of a suitable utility representation. The focus of this paper is on the theoretical fundamentals and the practical implications of social returns. We apply each version of the theoretical model to a different realm. In the deterministic setup, we look at an investor who faces a small number of assets: the S&P Euro Index, the EuroMTS Global Index, and the responsAbility Global Microfinance, where we assign a social return only to the microfinance investment fund. In the second application with stochastic social returns, we estimate statistical moments of social returns of various microfinance institutions and address the question how microfinance investment funds should allocate funds to microfinance institutions.
    JEL: G11 G21 G32 D64 D81
    Date: 2010–02
  3. By: Asher, Mukul (Asian Development Bank Institute)
    Abstract: The current global economic crisis has led to greater prominence for the issue of strengthening social protection systems in Asia. This paper analyzes the key factors determining and the possible avenues for strengthening social protection systems in Asia. The choice of an appropriate combination of avenues depends on the initial starting point, public policy objectives, institutional, fiscal, and other capabilities. <p>Following introductory remarks, Section 2 discusses demographic and labor market trends in Asia. It stresses that rapid ageing and large, informal labor markets pose challenges for Asian social protection systems, while making the role of the state even more essential. This is followed in Section 3 by an overview of social security systems in Asia. The key point is that while there are fairly elaborate social security programs in Asia, primarily for formal sector employees, this does not necessarily imply that the schemes are well designed, have wide coverage, or are financially sustainable. Section 4 discusses four general avenues to strengthening social protection systems. These emphasize greater professionalism, parametric and systemic reforms, social assistance, and social pensions, as well as others such as microfinance institution-initiated pensions. <p>The final section provides concluding observations. The global economic crisis provides a potential opportunity for strengthening social protection systems. However, the construction of multitiered social protection systems will require much greater professionalism, experimentation, political and organizational leadership, and vision.
    Keywords: asia social protection systems; strengthening social systems; social development; global economic crisis; social protection systems
    JEL: H55 H87 J11 J18 J21 J26
    Date: 2010–02–23

This issue is ©2010 by Aastha Pudasainee and Olivier Dagnelie. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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