nep-mfd New Economics Papers
on Microfinance
Issue of 2011‒03‒05
four papers chosen by
Olivier Dagnelie
Instituto de Analisis Economico, CSIC

  1. Credit to Women Entrepreneurs: The Curse of the Trustworthier Sex By Isabelle Agier; Ariane Szafarz
  2. Raising the ‘Beatrice’s Goat’: The Indian Experience in Microcredit By B. P., Asalatha; Pillai N., Vijayamohanan
  3. When Opposites Attract: Is the Assortative Matching Always Positive? By Reito, Francesco
  4. Microcredit and poverty. An overview of the principal statistical methods used to measure the program net impacts By Orso, Cristina

  1. By: Isabelle Agier; Ariane Szafarz
    Abstract: Women entrepreneurs are known not only to reimburse loans swifter than men, but also to receive smaller loans. However, on average women have smaller-scope business projects and are poorer than men. A deeper investigation is thus required in order to assess the existence of gender discrimination in small-business lending. This is precisely the aim of this paper. Its contribution is twofold. Firstly, it proposes a new estimation method for assessing discrimination in loan allocation. This method operationalizes the theoretical “double standard” approach developed by Ferguson and Peters (1995, Journal of Finance). Secondly, this paper applies the new methodology to an exceptionally rich database from a Brazilian microfinance institution. The empirical results point to gender discrimination. Additionally, it is shown that reducing the information asymmetry through relationship brings no remedy to the curse of the trustworthier sex.
    Keywords: Small Business; Microcredit; Gender; Loan Size; Denial Rate; Default
    JEL: G24 L26 O16 M13
    Date: 2011–02
  2. By: B. P., Asalatha; Pillai N., Vijayamohanan
    Abstract: Empowerment of the poor entails three basic inter-linked dimensions – generation of employment (and income), reduction of poverty, and erasing inequality. The perspective has now undergone a basic change from the collective care mechanism of a paternalistic state intervention meted out from the top to bottom to a people-centered and participation-oriented bottom up approach. With this new perspective, new practices have emerged through integrated community participation of the poor. Thus the basis of the concept of micro finance is self-mobilization and self-organization of the poor at the community level driven by an ardent desire backed by an unfaltering trust in their own inherent capacity to improve their living conditions by themselves, given an enabling environment. An active realization of such self-mobilization is found in self help groups (SHGs), formed for distributing the microcredit benefits, inspired by the success of the Bangladesh Grameen experiment. This approach has already taken strong roots across the lengths and breadths of India as an effective and viable channel to take the poor to a new domain of economic empowerment and social upliftment. Microcredit, which synergies the thrift and credit habits of the poor in a participatory and informal setting, is now widely acknowledged as a strategic tool in all poverty alleviation programmes. This paper discusses the Indian experience in microcredit.
    Keywords: Microcredit; Indian experience; empowerment; financial inclusion
    JEL: D6 I3 G0
    Date: 2010–12–01
  3. By: Reito, Francesco
    Abstract: This paper shows that the positive assortative matching of Ghatak (1999) and Van Tassel (1999) is not a general result and always depends on the distribution of safe and risky types. Some new implications are: (i) borrowers may be better off by forming mixed groups. (ii) a mixed pooling equilibrium is possible when homogeneous pooling equilibria do not exist, and even when the reservation income of borrowers is equal to zero.
    Keywords: joint liability lending; assortative matching; screening
    JEL: D81 G20 O12
    Date: 2011–02–17
  4. By: Orso, Cristina
    Abstract: The purpose of this paper is to examine di¤erent econometric approaches aiming to evaluate the impact of microcredit on poverty. Starting with a brief description of microcredit and the most common kinds of statistical biases connected to these studies, I describe the principal characteristics of Non-Randomized and Randomized approaches, in order to highlight strengths and weaknesses concerning the application of such methodologies.
    Keywords: Microcredit, poverty, program impact, randomized approach, non-randomized approach.
    Date: 2011–02

This nep-mfd issue is ©2011 by 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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