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on Microfinance |
| By: | Leif Atle Beisland; Roy Mersland |
| Abstract: | Rating assessments of microfinance institutions are claimed to measure a combination of creditworthiness, trustworthiness and excellence in microfinance. Using a global dataset covering reports from 324 microfinance institutions, this study suggests that these ratings are mainly driven by size, profitability, and risk. The ratings do not seem to capture the double bottom-line objective of microfinance institutions, as our analyses are unable to prove any statistical relationship between microfinance ratings and the social objectives of these institutions. Moreover, the association between operational efficiency and microfinance ratings appears weak. Although there are some minor differences between the rating agencies, the overall results suggest that microfinance ratings convey information very similar to that communicated by traditional credit ratings. |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:2013/78918&r=mfd |
| By: | Koen Rossel-Cambier |
| Abstract: | This paper aims at gaining deeper understanding of the possible effects of combined microfinance (CMF) on social and economic performance outcomes. By means of a case-study on the City of Bridgetown (COB), one of the leading credit unions in Barbados, it explores the possible limits, challenges and economies of scope of CMF. This case-study suggests that CMF, especially the combination credit-savings, may enhance the cost-efficiency of loan delivery and that it can generate economies of scope for marketing purposes. Savings is at the heart of the growth strategy of the credit union and has contributed to its current large breadth of outreach. The paper observes that more female than male clients participate in insurance schemes, highlighting gender differences. The case-study suggests that CMF can also lead to a number of combined and additional costs and financial risks, which need to be taken into account. The nature of product diversification can lead to additional access barriers for unbankable clients, especially related to financial costs and information asymmetry. |
| Keywords: | microfinance; combined microfinance; microinsurance; microcredit; microsavings; poverty; social inclusion; Caribbean |
| JEL: | C12 G21 G22 L31 O54 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:2013/78912&r=mfd |
| By: | Annim, Samuel Kobina; Dasmani, Isaac; Armah, Mark |
| Abstract: | The study relies on Ghana’s Living Standard Measurement Survey to test the hypothesis of no relationship between credit and household food consumption expenditure. We use single stage and pooled least squares given the non-availability of national panel data in Ghana and lack of better instruments in the Living Standard data. While cognisant of the adverse effect of endogeneity we observe that our finding fails to provide enough evidence to reject the null hypothesis. This suggests that access to credit does not contribute to the smoothening of household consumption. This observation cuts across different sub-samples based on socio-economic classification. We recommend caution in propagating the ability of credit in smoothening consumption. |
| Keywords: | FINANCE; HOUSEHOLD; CONSUMPTION; INCOME |
| JEL: | I30 G21 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:29278&r=mfd |
| By: | Tanguy Bernard; Stefan Dercon; Alemayehu Seyoum Taffesse |
| Abstract: | Fatalism is considered pervaisve, not leaste within many poor communities. In this paper, we explore whether 'fatalistic' beliefs have implications for the attitudes and behaviour of poor rural households towards investment in the future. We first explore the idea of fatalos, drawing inspiration from theories in psychology focusing on the role of locus of control and self-efficacy, and from the theoretical framework of aspiration failure as developed in recent economic literature. using survey data from rural Ethiopia, we find evidence of fatalistic beliefs among a substantial group of rural households, as well as indicators consistent withy a small aspiration gap and low self-efficay. We also find that such beliefs consistently correlate with lower demand for credit, in terms of loan size, repayment horizon and productive purposes. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:csa:wpaper:2011-03&r=mfd |
| By: | Pal, Rama |
| Abstract: | Borrowing to cover hospital costs is a major concern in developing countries, like India, as it may push households into despairs of poverty and indebtedness. The present study examines factors that lead to borrowing for hospitalization in case of Indian households. For this purpose, we use sample selection model. The analysis points out vulnerability of households from deprived sections of society and uneducated households, as they are more likely to borrow. Moreover, higher availability of public hospitals lowers probability of borrowing in rural areas. Thus, increasing coverage of public hospitals in rural areas might prove to be helpful. |
| Keywords: | Hospital costs; Borrowing; Sample Selection Model |
| JEL: | I18 I19 |
| Date: | 2010–08–18 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:29404&r=mfd |
| By: | Carol Newman (Institute for International Integration Studies, Trinity College Dublin; Department of Economics, Trinity College Dublin); Fiona Wainwright (Department of Economics, Trinity College Dublin) |
| Abstract: | This paper considers the various strategies rural households employ to avoid consumption shortfalls caused by realizations of adverse income shocks. First, we develop an ex post theoretical model within an inter-temporal utility maximizing framework which we use to explain households’ decisions to insure against idiosyncratic risk and save to protect against uninsurable spatially covariant risk. In the theoretical model we show that the latter can take a variety of different asset forms depending on the absolute level of risk aversion of the household and the variability in asset returns. Second, using household level panel data from Vietnam we test the extent to which households’ smooth consumption over time and how this depends on the presence of insurance and saving instruments. Third, we consider savings and liquid asset holdings as a form of self-insurance or precautionary savings against spatially covariant shocks. Overall, our results suggest that households deplete their stock of total liquid assets in the event of exposure to both exogenous and idiosyncratic income shocks. The ability of households to cope is also dependent on their receipt of public and private transfers in the event of an exogenous natural shock with insurance claims serving to alleviate the depletion of livestock holdings in the event of insurable idiosyncratic income shocks. These results are particularly pronounced for low and middle wealth groups. |
| Keywords: | Insurance, precautionary savings, risk-coping, income shocks |
| JEL: | D14 D91 O12 O16 |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:iis:dispap:iiisdp358&r=mfd |
| By: | Justin, Nelson Michael |
| Abstract: | Co-operative movement dawned in India a century ago to eradicate indebtedness and to accelerate agricultural production in India. Co-operatives are eminently suited to achieve social, economic changes in rural India. However, credit risk is acute in co-operative credit system, predominantly manifested in short-term credit. Delinquency of co-operative credit is the object of enquiry for many committees and researches. Mounting overdues at the level of Primary Agricultural Co-operative Banks (PACB) contribute to the accumulation of Non-performing Assets (NPA) in the Central Co-operative Banks (CCB). Willful default has been identified as the main reason for mounting overdues. This empirical study of defaulters of co-operative credit has examined the factors discriminating default of co-operative credit, which subsequently increase NPA. Univariate Analysis and Discriminant Function analysis was carried out to identify the factors. Such identification of factors discriminating credit default is crucial to reduce credit delinquency in co-operative credit system. |
| Keywords: | credit risk; credit delinquency; co-operative credit; willful default |
| JEL: | E51 G32 G21 |
| Date: | 2010–11–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:29508&r=mfd |
| By: | Marcel Fafchamps; Matthias Schündeln |
| Abstract: | Combining data from the Moroccan census of manufcaturing enterprises with information from a commune survey, we test whether firm expansion is affected by local financial development. Our findings are consistent with this hypothesis: local bank availability is robustly associated with faster growth for small and medium-size firms in sectors with growth opportunities, with a lower likelihood of firm exit and a higher likelihood of investment. The findings also suggests a channel for the effect of the availability of financing in firm growth in our data, namely that access to credit was used to invest in labor saving technology. |
| Keywords: | manufacturing, credit constraint, firm size |
| JEL: | O16 L25 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:csa:wpaper:2011-02&r=mfd |