nep-mfd New Economics Papers
on Microfinance
Issue of 2011‒08‒22
two papers chosen by
Olivier Dagnelie
Instituto de Analisis Economico, CSIC

  1. The Impact of the Global Financial Crisis on Microfinance and Policy Implications By Gabriel Di Bella
  2. The Impact of Trade Liberalization on Micro Enterprises: Do Banks Matter? Evidence from Indian Manufacturing By Asha Sundaram

  1. By: Gabriel Di Bella
    Abstract: The global financial crisis affected microfinance institutions (MFIs) as lending growth was constrained by scarcer borrowing opportunities, while the economic slowdown negatively impacted asset quality and profitability. It also brought to the fore the relatively high interest rates that MFIs charge to their (low-income) customers. This paper revisits the issue of systemic risk of MFIs, and finds that contrary to the evidence before the crisis, MFI performance is correlated not only to domestic economic conditions but also to changes in international capital markets. It also presents an empirical analysis of lending rates with the purpose of informing policy decisions, and finds that loan sizes, productivity, and MFI age contribute to explain differences in lending rate levels. This suggest that regulation (and policies) promoting MFI competition, and innovation in lending technologies have a better chance to result in decreased lending rates.
    Keywords: Global Financial Crisis 2008-2009 , Economic conditions , International capital markets , Interest rates on loans , Credit risk , Microfinance ,
    Date: 2011–07–26
    URL: http://d.repec.org/n?u=RePEc:imf:imfwpa:11/175&r=mfd
  2. By: Asha Sundaram
    Abstract: This paper looks at the impact of trade liberalization on output, factor intensity and labor productivity of micro enterprises with differential access to banks. It uses Indian data on micro enterprises employing fewer than ten workers in the manufacturing sector and finds that trade liberalization, measured by a fall in the tariff, is associated with higher enterprise output, capital-labor ratios and labor productivity in districts with a larger number of bank branches per capita. Evidence is consistent with strong complementarities between trade liberalization effects and better access to credit and greater economic dynamism due to greater bank presence in the enterprise’s location. In addition, the research points to greater likelihood of outsourcing of production activity to micro enterprises in more open industries. The study highlights the role of credit market institutions, labor regulation and linkages between micro enterprises and large firms in determining the effects of trade liberalization on developing country manufacturing.
    Keywords: Trade Reform, Banks, Manufacturing, Informal Firms, Productivity, Outsourcing
    JEL: F16 J32 L24 O14 O17
    Date: 2011
    URL: http://d.repec.org/n?u=RePEc:rza:wpaper:225&r=mfd

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