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on Microfinance |
| By: | Khandker, Shahidur R.; Koolwal, Gayatri B.; Badruddoza, Syed |
| Abstract: | Over the past 20 years, Bangladesh has witnessed strong competition among microfinance institutions. Using program-level panel data from 2005-2010, this paper studies the microfinance institutions'recent competitive roles in their pricing of products, targeting strategies and portfolio shifts, as well as their ability to recover loans. The findings do not support the view that newer microfinance institutions are less risk-averse in their targeting, or that increased borrowing among households due to microfinance institution competition has lowered recovery rates. There is also a considerable urban-rural distinction; although newer microfinance institutions tend to attract riskier clients in urban areas, the opposite is true in rural areas. Loan recovery rates are also the highest among the newest microfinance institutions for women in rural areas, suggesting that microfinance institutions may offer distinct products in these areas to attract better-risk clients. The portfolio of newer microfinance institutions also has a greater share of lending for agriculture, and fewer savings products. |
| Keywords: | Debt Markets,Banks&Banking Reform,Emerging Markets,Microfinance,Rural Finance |
| Date: | 2013–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6408&r=mfd |
| By: | Khandker, Shahidur R.; Samad, Hussain A. |
| Abstract: | This paper addresses whether microcredit participants in Bangladesh are trapped in poverty and debt, as many critics have argued in recent years. Analysis of data from a long panel survey over a 20-year period confirms this is not the case, although numerous participants have been with microcredit programs for many years. The results of the analysis suggest that participants derive a variety of benefits from microcredit: It helps them to earn income and consume more, accumulate assets, invest in children's schooling, and be lifted out of poverty. This is not to say that non-participants have failed to progress over the same period. Both participants and non-participants have gained as the economy has grown; however, the rates of poverty reduction have been higher for participants. Testing the net effect of microcredit programs requires applying an econometric method that controls for why some households participated and others did not, conditional on their initial characteristics. In addition, the method must control for time-varying, unobserved heterogeneity that affects everyone over time, albeit in possibly different ways. The paper's econometric estimates show significant welfare gains resulting from microcredit participation, especially for women. They also show that the accrued benefits of borrowing outweigh accumulated debt. As a result, households'net worth has increased, and both poverty and the debt-asset ratio have declined. |
| Keywords: | Rural Poverty Reduction,Debt Markets,Banks&Banking Reform,Poverty Monitoring&Analysis |
| Date: | 2013–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6404&r=mfd |
| By: | Renaud Bourlès (Ecole Centrale Marseille (Aix-Marseille School of Economics), CNRS & EHESS); Anastasia Cozarenco (Aix-Marseille University (Aix-Marseille School of Economics), CNRS & EHESS) |
| Abstract: | We analyze in this paper how various forms of State intervention can impact the microcredit market in developed countries. Using a simple model where entrepreneurs borrow without collateral, we study the effect of different policies on microfinance institutions' lending behavior. We first introduce state intervention through the loan guarantee and show that, not surprisingly, it increases the number of entrepreneurs receiving a loan. However, after modeling business development services provided by the microfinance institution, we show that the government loan guarantee can have a counterproductive effect by reducing the number of entrepreneurs benefiting from such services. We therefore analyze an alternative policy: the subsidization of business development services by the State. We then provide a condition under which - for fixed government expenditures - such subsidies are more effective (in terms of outreach) than loan guarantees. |
| Keywords: | microcredit, loan guarantee, business development services, microfinance institution. |
| JEL: | G14 G21 G38 D45 D82 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:aim:wpaimx:1325&r=mfd |
| By: | Manojit Bhattacharjee (Institute for Social and Economic change); Meenakshi Rajeev (Institute for Social and Economic change) |
| Abstract: | This paper is an attempt to link the problem of non-repayment in the formal credit market with the accessibility to credit from informal sources. In many developing countries a well established network of informal lenders continues to prevail in spite of various formal lending programmes implemented by the government. Scholars often dealt with how the poorer households become the victim of usurious rates of interest charged by informal lenders and lose their valuable properties. We however show that more unfavourable the terms of loan from a moneylender compared to that of a formal lending agency, better is the chance of a borrower making timely repayment and get the benefit of formal loan on a recurring basis, which is not available in case of default. After establishing the conditions theoretically, the paper using National Sample Survey Organisation (NSSO, India) database, empirically tries to examine such an impact in the case of short term formal loans. The empirical analysis reveals the positive and significant impact of informal interest rates on repayment of formal loans. |
| Keywords: | Repayment, Formal Lending Agency, Informal Lending Agency |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:sch:wpaper:273&r=mfd |
| By: | Colson, Gregory; Ramirez, Octavio A.; Fu, Shengfei |
| Keywords: | Agricultural and Food Policy, Agricultural Finance, |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:ags:ugeofs:146993&r=mfd |