nep-mfd New Economics Papers
on Microfinance
Issue of 2012‒09‒22
three papers chosen by
Olivier Dagnelie
Instituto de Analisis Economico, CSIC

  1. Microfinance at the Microfinance at the margin: experimental evidence from Bosnia and Herzegovina vidence from Bosnia and Herzegovina By Britta Augsburg; Ralph De Haas; Heike Harmgart; Costas Meghir
  2. External Validity and Partner Selection Bias By Hunt Allcott; Sendhil Mullainathan
  3. How has Mobile Phone Penetration Stimulated Financial Development in Africa? By Simplice A , Asongu

  1. By: Britta Augsburg (Institute for Fiscal Studies); Ralph De Haas (EBRD); Heike Harmgart (EBRD); Costas Meghir (Yale University and University College London)
    Abstract: We use a randomised controlled trial (RCT) to analyse the impact of microcredit on poverty reduction in Bosnia and Herzegovina. The study population are loan applicants that would normally have just been rejected based on regular screening. We find that access to credit allowed borrowers to start and expand small-scale businesses. Households that already had a business and where the borrower had more education, ran down their savings, presumably to complement the loan and to achieve the minimum amount necessary to expand their business. In less-educated households, however, consumption went down. A key new result is that there was a substantial increase in the labour supply of young adults (16-19 year olds). This was accompanied by a reduction in school attendance.
    Keywords: Microfinance; liquidity constraints; human capital; randomised controlled trial
    JEL: G21 D21 I32
    Date: 2012–09
  2. By: Hunt Allcott; Sendhil Mullainathan
    Abstract: Program evaluation often involves generalizing internally-valid site-specific estimates to a different target population. While many analyses have tested the assumptions required for internal validity (e.g. LaLonde 1986), there has been little empirical assessment of external validity in any context, because identical treatments are rarely evaluated in multiple sites. This paper examines a remarkable series of 14 energy conservation field experiments run by a company called Opower, involving 550,000 households in different cities across the U.S. We first show that the site-specific treatment effect heterogeneity is both statistically and economically significant. We then show that Opower partners are selected on partner-level characteristics that are correlated with the treatment effect. This "partner selection bias" implies that replications with additional partners have not given an unbiased estimate of the distribution of treatment effects in non-partner sites. We augment these results in a different context by showing that partner microfinance institutions (MFIs) that carry out randomized experiments are selected on observable characteristics from the global pool of MFIs. Finally, we propose two simple suggestive tests of external validity that can be used in the absence of data from many sites: comparison of observable sample and target site characteristics and an F-test of heterogeneous treatment effects across "sub-sites" within a site.
    JEL: C93 D12 L94 O12 Q41
    Date: 2012–09
  3. By: Simplice A , Asongu
    Abstract: In the first macroeconomic empirical assessment of the relationship between mobile phones and finance, this paper examines the correlations between mobile phone penetration and financial development using two conflicting definitions of the financial system in the financial development literature. With the traditional IFS (2008) definition, mobile phone penetration has a negative correlation with traditional financial intermediary dynamics of depth, activity and size. However, when a previously missing informal-financial sector component is integrated into the definition, mobile phone penetration has a positive correlation with informal financial development. Three implications result: there is a growing role of informal finance; mobile phone penetration may not be positively assessed at a macroeconomic level by traditional financial development indicators and; it is a wake-up call for scholarly research on informal financial development indicators which will oriented monetary policy.
    Keywords: Banking; Mobile Phones; Shadow Economy; Financial Development; Africa
    JEL: L96 O17 E00 O33 G20
    Date: 2012–09–10

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