nep-mfd New Economics Papers
on Microfinance
Issue of 2010‒09‒18
three papers chosen by
Olivier Dagnelie
Instituto de Analisis Economico, CSIC

  1. Medium and Long-Term Participation in Microfinance: An Evaluation Using a New Panel Dataset from Bangladesh By Asadul Islam
  2. Group Lending Scheme operating through Primary Agricultural Credit Society: A Critical Assessment By Amit, Kundu; Suranjana, Mitra
  3. Risk Management among the Poor: The Case of Microfinancial Services By Arun, Thankom; Bending, Mirko

  1. By: Asadul Islam
    Abstract: The objective of this paper is to estimate the impacts of medium and long term participation in microfinance programs. It utilises a new, large and unique panel dataset collected from treatment and control households from 1997 to 2005. The data enables us to identify continuing participants in the program as well as newcomers and leavers. We employ different estimation strategies including triple-difference and propensity score matching methods to control for selection bias. The impact estimates indicate that the benefits from microfinance vary more than proportionately with the duration of participation in a program. Larger benefits are realized from longer-term participation, and that the benefits continue to accrue beyond departure from the program. The findings indicate the need to observe longer periods of participation to provide a reliable basis for assessing the effectiveness of microfinance lending.
    Keywords: Microfinance, Bangladesh, triple-difference, matching, medium-term,long-term.
    JEL: C21 C33 H43 G21 I31 O12 O16
    Date: 2010–05
  2. By: Amit, Kundu; Suranjana, Mitra
    Abstract: The basic objective of the paper is to identify the effectiveness of group lending based microfinance programme operating through Primary Agricultural Credit Society to improve the economic condition among the rural participants in two blocks of Hooghly district in West Bengal. Here to do the impact study we have considered both Difference-in-Difference and First Difference Method with the help of longitudinal data and it is applied to minimize the possibility of selection bias during the time of drawing samples. It came out from field survey that very few marginal farmers had taken credit from their respective groups for agricultural purposes. Results reveal that there has been no significant impact of microfinance programme in terms of improvement of the outcome variables among the member households in spite of low interest rate charged on loans, high repayment rate within groups and small size of self-help groups. The reasons responsible are lack of skill-based training programmes for the members of groups and lack of marketing facilities to promote and sell the products produced by the members of self-help groups. The only positive aspect is the members can now protect themselves from the crunches of professional money lenders who charged exorbitant interest rates
    Keywords: Microfinance; Self-help groups; Joint liability Credit Contract; Primary Agricultural Credit Society.
    JEL: I38 Q14 G21
    Date: 2010–04–02
  3. By: Arun, Thankom (University of Central Lancashire); Bending, Mirko (German Institute for Global and Area Studies)
    Abstract: This paper argues that the level of financial services provision determines the risk management strategies among the poor. The paper estimates the determinants of the household’s use of one, two or all three types of microfinancial services applying ordered probit models and additionally probit models for combinations of them. By doing this on household survey data from Sri Lanka, there is empirical evidence that household's probability to participate in microfinancial services increases with rising self perception towards risk. Further, we find that it depends highly on the type of risk, if a household is more or less likely to use microfinancial services in Sri Lanka, whereas the accessibility to one, two or three microfinancial services is determined by the experience of specific hazards in the past. The study finds that the poor are less likely to use microfinancial services than their better off counterparts.
    Keywords: financial markets, financial services, microinsurance, Sri Lanka, South Asia
    JEL: G20 O16 R22
    Date: 2010–09

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