nep-mfd New Economics Papers
on Microfinance
Issue of 2013‒12‒06
two papers chosen by
Olivier Dagnelie
Instituto de Analisis Economico, CSIC

  1. The macroeconomics of microfinance By Francisco J. Buera; Joseph P. Kaboski; Yongseok Shin
  2. The Role of Islamic Banking System as the Milestone towards Indonesia Micro Economy Development By Rahajeng, DIAN

  1. By: Francisco J. Buera; Joseph P. Kaboski; Yongseok Shin
    Abstract: We provide a quantitative evaluation of the aggregate and distributional impact of microfinance or credit programs targeted toward small businesses. We find that the redistributive impact of microfinance is stronger in general equilibrium than in partial equilibrium, but the impact on aggregate output and capital is smaller in general equilibrium. Aggregate total factor productivity (TFP) increases with microfinance in general equilibrium but decreases in partial equilibrium. When general equilibrium effects are accounted for, scaling up the microfinance program will have only a small impact on per-capita income, because the increase in TFP is counterbalanced by lower capital accumulation resulting from the redistribution of income from high-savers to low-savers. Nevertheless, the vast majority of the population will be positively affected by microfinance through the increase in equilibrium wages.
    Keywords: Macroeconomics ; Small business - Finance
    Date: 2013
    URL: http://d.repec.org/n?u=RePEc:fip:fedlwp:2013-034&r=mfd
  2. By: Rahajeng, DIAN
    Abstract: As the largest Muslim community in the world, Indonesia is optimist on implementing Islamic economy as one of the system. The previous global financial turmoil has made the attention turn on the Islamic financial model, and in particular the Islamic banking system. This model offers a microfinance system that allows poor people to meet their financial needs. Most banking systems are less concern about the difficulties affecting poor people since they usually have no collateral, making them a riskier investment. Knowing the 98.9% micro industries of Indonesia, it is an urgent need on facilitating their financial intermediaries. The Islamic microfinance system manages this demand by providing small-scale financial services to the lower and poor markets by giving them banking facility. Hence Islamic microfinance helps to sustain financial inclusion as attempt for that mostly poor society who has lack access to financial institution. The motivation for this research is to meet the knowledge gap of acceptance on the Islamic banking system implementation in the Indonesian micro economy development. The research questions is how micro industries perception and acceptance towards the existence of Islamic rural banks. The methodologies used are survey as primary data collection of 60 both Islamic and common rural banks for thorough analysis also secondary data collection from its financial reports. The research finding is the positive perception and acceptance of Islamic rural banks as micro industries’ financial intermediaries. This research concludes that Islamic rural bank has become the part of micro banking services and contributes on building ideal Indonesia development.
    Keywords: Islamic banking, development, acceptance, micro industry, financial intermediaries
    JEL: C83 C91 D14 D7 G02 G2 G21 Z00
    Date: 2013–09–10
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:50465&r=mfd

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