nep-mfd New Economics Papers
on Microfinance
Issue of 2010‒11‒20
two papers chosen by
Olivier Dagnelie
Instituto de Analisis Economico, CSIC

  1. Microfinance and Poverty -A Macro Perspective By Katsushi S. Imai; Raghav Gaiha; Ganesh Thapa; Samuel Kobina Annim
  2. Financial Inclusion in Karnataka: A Study of Operationalisation of No Frills Accounts By Rai, Anurag; Saha, Amrita

  1. By: Katsushi S. Imai (Economics, School of Social Sciences, University of Manchester, UK and Research Institute for Economics & Business Administration, Kobe University, Japan); Raghav Gaiha (Massachusetts Institute of Technology, USA & Faculty of Management Studies, University of Delhi, India); Ganesh Thapa (International Fund for Agricultural Development, Italy); Samuel Kobina Annim (Economics, School of Social Sciences, University of Manchester, UK)
    Abstract: This paper tests the hypothesis that microfinance reduces poverty at macro level using cross-country and panel data, based on the Microfinance Information Exchange (MIX) data on MFIs and the new World Bank poverty estimates. Taking account of the endogeneity associated with loans from MFIs, our econometric analysis shows that a country with higher MFIs' gross loan portfolio tends to have lower levels of FGT class of poverty indices. Contrary to recent micro evidence based on randomised evaluations pointing to no or weak effect on poverty, there is robust confirmation of the poverty reducing role of microfinance. Significantly, microfinance loans are negatively associated with not only the poverty headcount ratio, but also with the poverty gap and squared poverty gap, implying that even the poorest benefit from them. The case for channelling funds from development finance institutions and governments of developing countries into MFIs is thus reinforced. Our assessment has added significance as the tide seems to be turning against microfinance as a means of poverty alleviation.
    Date: 2010–10
  2. By: Rai, Anurag; Saha, Amrita
    Abstract: Financial inclusion may be defined as the process of ensuring timely and adequate access to financial services and credit delivery for low income groups at an affordable cost. The basic aim of Financial Inclusion is to ensure the ease of access, availability and usage of the formal financial System by these groups. The objective of this paper is to design a tool for measuring the level of Operationalisation of No-Frills (NF) Accounts (similar to Saving A/c of Banks with limitation of the balance at Rs.50,000) opened during the first phase of Financial Inclusion in the state of Karnataka. The paper identifies usage in 6 different facilities of NF Accounts from banking facilities as parameters. A Sampling Survey is designed and data is collected from 26 Districts and 48 Public, Private and Regional Rural Banks through the Lead Bank System. These parameters are clubbed to form an Operationalisation Index that measures activity in different facilities for the banks and collectively in a district as a percentage of total No Frills A/Cs. On the basis of contribution to Operationalisation, every parameter is assigned a score. The cumulative score for all the parameters for a bank or a district are added and corresponding ranks are assigned. The individual significance of the parameters is assessed using statistical tests on the Cross Sectional Data and recommendations are made to the concerned Bank or District under study. Further, the No-Frills A/C s are analysed as a product on the Ansoff-Matrix and strategic marketing recommendation are drawn.
    Keywords: Financial Inclusion, Operationalisation
    JEL: G2
    Date: 2010–07–10

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