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on Microfinance |
| By: | Rasmussen, Ole Dahl (Department of Business and Economics) |
| Abstract: | It is common to see the interest rate on savings in community-managed microfinance being reported as "20-30% annually". Using panel data from 204 groups in Malawi, I show that the right figure is likely to be at least twice this figure. This is due to sector-wide application of non-standard interest rate calculation and unrealistic assumptions about the savings profile in the groups. In the 204 groups, the annual interest rate on savings is 63%. For transparency and accountability donors, politicians and practitioners should change their interest rate calculations. Furthermore, the proposal method will allow practitioners to better monitor group performance. |
| Keywords: | Microfinance; interest rates; performance monitoring; community-managed microfinance; village savings and loan associations; Malawi; NGO |
| JEL: | G21 M40 O16 Q13 |
| Date: | 2012–03–29 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sdueko:2012_009&r=mfd |
| By: | Poornima Gayangani Wasana Jayawardana Author_Email: poorja08@apu.ac.jp, japgwj@gmail.com (Ritsumeikan Asia Pacific University, Japan) |
| Keywords: | Rural Finance, Entrepreneurship, Women’s Empowerment |
| JEL: | M0 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:cms:1asb11:2011-031-189&r=mfd |
| By: | Lars Ivar Oppedal Berge; Kjetil Bjorvatn; Bertil Tungodden |
| Abstract: | Which is the most binding constraint to microenterprise development, human capital or financial capital? To answer this question, we present the first field experiment that jointly investigates these two constraints for poor microentrepreneurs, by introducing separate treatments of business training and a business grant. We combine survey data and data from a lab experiment to investigate treatment effects on business results, business practices, business skills and mind-set. Our study demonstrates a strong effect of business training on male entrepreneurs, while the effect on female entrepreneurs is much more muted. There is no effect of the business grant for either males or females. The results suggest that human capital may be the more important constraint for poor microentrepreneurs, but also point to the need for more comprehensive measures to promote development among female entrepreneurs. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:chm:wpaper:wp2011-1&r=mfd |
| By: | Christopher Blattman; Nathan Fiala; Sebastian Martinez |
| Abstract: | Can cash transfers promote employment and reduce poverty in rural Africa? Will lower youth unemployment and poverty reduce the risk of social instability? We experimentally evaluate one of Uganda's largest development programs, which provided thousands of young people nearly unconditional, unsupervised cash transfers to pay for vocational training, tools, and business start-up costs. Mid-term results after two years suggest four main findings. First, despite a lack of central monitoring and accountability, most youth invest the transfer in vocational skills and tools. Second, the economic impacts of the transfer are large: hours of nonhousehold employment double and cash earnings increase by nearly 50% relative to the control group. We estimate the transfer yields a real annual return on capital of 35% on average. Third, the evidence suggests that poor access to credit is a major reason youth cannot start these vocations in the absence of aid. Much of the heterogeneity in impacts is unexplained, however, and is unrelated to conventional economic measures of ability, suggesting we have much to learn about the determinants of entrepreneurship. Finally, these economic gains result in modest improvements in social stability. Measures of social cohesion and community support improve mildly, by roughly 5 to 10%, especially among males, most likely because the youth becomes a net giver rather than a net taker in his kin and community network. Most strikingly, we see a 50% fall in interpersonal aggression and disputes among males, but a 50% increase among females. Neither change seems related to economic performance nor does social cohesion - a puzzle to be explored in the next phase of the study. These results suggest that increasing access to credit and capital could stimulate employment growth in rural Africa. In particular, unconditional and unsupervised cash transfers may be a more effective and cost-efficient form of large-scale aid than commonly believed. A second stage of data collection in 2012 will collect longitudinal economic impacts, additional data on political violence and behavior, and explore alternative theoretical mechanisms. |
| Keywords: | Cash grant, randomized control trial, credit constraints, psychological and social impacts |
| JEL: | O12 O15 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1201&r=mfd |