nep-mfd New Economics Papers
on Microfinance
Issue of 2012‒07‒23
four papers chosen by
Olivier Dagnelie
Instituto de Analisis Economico, CSIC

  1. Does NGO Microfinance Crowd Out Other Credits: Micro Evidence from Rural China By Jia, Xiangping; Xiang, Cheng; Huang, Jikun
  2. Microfinance for agricultural firms - What can we learn from bank data? By Weber, Ron; Musshoff, Oliver
  3. Microfinance efficiency in the West African Economic and Monetary Union: have reforms promoted sustainability or outreach? By KABLAN, Sandrine
  4. Informal Credit and Factor Productivity in Africa: Does Informal Credit Matter? By Owuor, George; Shem, A.O.

  1. By: Jia, Xiangping; Xiang, Cheng; Huang, Jikun
    Keywords: Agribusiness, International Development,
    Date: 2012–06–29
  2. By: Weber, Ron; Musshoff, Oliver
    Abstract: Using a unique dataset of a commercial microfinance institution (MFI) in Tanzania this paper investigates first whether agricultural firms have a different probability to get a loan and whether their loans are differently volume rationed than loans to non-agricultural firms. Second, we analyze whether agricultural firms repay their loans with different delinquencies than non-agricultural firms. Our results reveal that agricultural firms face higher obstacles to get credit but as soon as they have access to credit, their loans are not differently volume rationed than those of non-agricultural firms. Furthermore, agricultural firms are less often delinquent when paying back their loans than non-agricultural firms. Our findings suggest that a higher risk exposition typically attributed to agricultural production must not necessarily lead to higher credit risk. They also show that the investigated MFI overestimates the credit risk of agricultural clients and, hence, should reconsider its risk assessment practice to be able to increase lending to the agricultural sector. In addition, our results might indicate that farmers qualify less often for a loan as they do not fit into the standard microcredit product.
    Keywords: Agricultural Finance, Access to Credit, Loan Repayment, Microfinance Institutions, Agricultural Finance, G21, G32, Q14,
    Date: 2012–08
  3. By: KABLAN, Sandrine
    Abstract: This study aims to assess the microfinance institutions’ (MFIs’) efficiency in the West African Economic and Monetary Union (WAEMU) after the reforms that were undertaken in the industry. Given the complementary role between MFIs and banks (where MFIs reach the population that the banks cannot), we ask whether these reforms have promoted sustainability or outreach. For this purpose, we use a data envelopment analysis (DEA) to measure the social efficiency on the one hand and the financial efficiency on the other hand. Our results show that sustainability prevails. Indeed, we observe an increase in financial efficiency at the expense of social and financial efficiency. MFIs that stress outreach tend to be less efficient, when one considers their intermediation role. Moreover, reforms have a negative impact on social efficiency and a positive impact on financial efficiency. Indeed, prudential ratios and accounting standards that were implemented, led MFIs to privilege their intermediation role.
    Keywords: efficiency; microfinance; outreach; reform programs; sustainability; WAEMU
    JEL: O55 C23 O16 C61 C67 G21
    Date: 2012–07–06
  4. By: Owuor, George; Shem, A.O.
    Abstract: It is widely documented that credit is an important instrument among resource poor farmers in developing economies. However, accessing loans from formal credit institutions has proved almost impossible for small and resource poor farmers leading to reliance on the least regulated informal credit sources such as the Grameen type institutions (Micro-Finance Institutions-MFIs) that peg lending to memberships in social networks such as groups. In spite of the growing preference to this type of lending, very little is known on their contribution among farm related productive activities in Kenya. This paper attempts to illuminate the role of lending via groups on economic performance of smallholder farmers via changes in purchased factor use between borrowers and non-borrowers. We employ endogenous switching regime approach (accomplished via heckman selection correction model) on a sample of 401 respondents made up of 180 borrowers and 221 non-borrowers from two districts in Kenya. Results show significant effects of group based lending on production via improved factors such as fertilizer, planting materials and crop chemicals, as well as on investment in non-farm businesses, hired labour, and in renting in more land. However, descriptive results indicate high fungibility of this type of credit, with over 20% use on non-productive activities, which infringe on expected output effects. Supervision and or issuing of credit in form of inputs could generate expected impact.
    Keywords: Informal Micro-Credit, Rural Smallholder Farmers, Productivity, Kenya, Agricultural Finance, International Relations/Trade,
    Date: 2012

This nep-mfd issue is ©2012 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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