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on Microfinance |
| By: | Manuela Angelucci, Dean Karlan, Jonathan Zinman |
| Abstract: | Theory and evidence have raised concerns that microcredit does more harm than good, particularly when offered at high interest rates. We use a clustered randomized trial, and household surveys of eligible borrowers and their businesses, to estimate impacts from an expansion of group lending at 110% APR by the largest microlender in Mexico. Average effects on a rich set of outcomes measured 18-34 months post-expansion suggest some good and little harm. Other estimators identify heterogeneous treatment effects and effects on outcome distributions, but again yield little support for the hypothesis that microcredit causes harm. |
| Keywords: | microcredit; microcredit impact; microentrepreneurship; Compartamos Banco |
| JEL: | D12 D22 G21 O12 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:cgd:wpaper:330&r=mfd |
| By: | Hartarska, Valentina; Mersland, Roy; Nadolnyak, Denis |
| Abstract: | This article asks if women are better bankers to the poor, motivated by recent work showing differences in performance between male and female CEOs in financial firms and in NGOs. We adapt the banking approach to managerial efficiency to account for the outreach and sustainability goals of Microfinance Institutions. We then evaluate whether outreach efficiency differs by the CEO's gender using panel data from 250 MFIs worldwide. We find that in rural markets, MFIs with female CEOs have 12-14 point higher outreach efficiency suggesting that promoting gender diversity at the top is likely to have social and financial benefits. |
| Keywords: | microfinance, microfinance institutions, gender and finance, outreach, efficiency, Agricultural Finance, Institutional and Behavioral Economics, G21, G30, O16, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaeass:161653&r=mfd |
| By: | Dean Karlan, Jonathan Zinman |
| Abstract: | The long-run price elasticity of demand for credit is a key parameter for intertemporal modeling, policy levers, and lending practice. We use randomized interest rates, offered across 80 regions by Mexico’s largest microlender, to identify a 29-month dollars-borrowed elasticity of -1.9. This elasticity increases from -1.1 in year one to -2.9 in year three. The number of borrowers is also elastic. Credit bureau data does not show evidence of crowd-out. Competitors do not respond by reducing rates, perhaps because Compartamos’ profits are unchanged. The results are consistent with multiple equilibria in loan pricing. |
| Keywords: | credit; microcredit |
| JEL: | E51 G21 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:cgd:wpaper:331&r=mfd |
| By: | Aggarwal, Raj (University of Akron); Goodell, John (University of Akron) |
| Abstract: | The preference of microfinance institutions for women borrowers is generally attributed to two reasons: women borrowers are more trustworthy and have greater social impact. However, the role of social trust with regard to this gender preference has not been adequately investigated. Controlling for the social outreach goals of MFIs, we document that MFIs favor women more in low trust countries, suggesting that women are targeted to offset low social trust. We also examine how the nature of trust formation affects this relationship between gender targeting and trust. Our results should be of considerable interest to policymakers and scholars. |
| JEL: | A14 G21 J16 J30 O16 |
| Date: | 2013–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedcwp:1317&r=mfd |
| By: | Dean Karlan, Aishwarya Lakshmi Ratan, Jonathan Zinman |
| Abstract: | The poor can and do save, but often use formal or informal instruments that have high risk, high cost, and limited functionality. This could lead to undersaving compared to a world without market or behavioral frictions. Undersaving can have important welfare consequences: variable consumption, low resilience to shocks, and foregone profitable investments. We lay out five sets of constraints that may hinder the adoption and effective usage of savings products and services by the poor: transaction costs, lack of trust and regulatory barriers, information and knowledge gaps, social constraints, and behavioral biases. We discuss each in theory, and then summarize related empirical evidence, with a focus on recent field experiments. We then put forward key open areas for research and practice. |
| Keywords: | Savings, Randomized Evaluation, Poverty |
| JEL: | D12 D91 G21 O16 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:cgd:wpaper:346&r=mfd |
| By: | Panda, P.; Chakraborty, A.; Dror, D.M.; Bedi, A.S. |
| Abstract: | This paper assesses insurance uptake in three community based health insurance (CBHI) schemes located in rural parts of two of India’s poorest states and offered through women’s self-help groups (SHGs). We examine what drives uptake, the degree of inclusive practices of the schemes, and the influence of health status on enrollment. The most important finding is that a household’s socio-economic status does not appear to substantially inhibit uptake. In some cases Scheduled Caste/ Scheduled Tribe (SC/ST) households are more likely to enroll. Second, households with greater financial liabilities find insurance more attractive. Third, access to the hospital insurance scheme (RSBY) does not dampen CBHI uptake, suggesting that the potential for greater development of insurance markets and products beyond existing ones would respond to a need. Fourth, recent episodes of illness and selfassessed health status do not influence uptake. Fifth, insurance coverage is prioritized within households, with the household head, the spouse of the household head and both male and female children of the household head, more likely to be insured as compared to other relatives. Sixth, offering insurance through women’s SHGs appears to mitigate concerns about the inclusiveness and sustainability of CBHI schemes. Given the pan-Indian spread of SHGs, offering insurance through such groups offers the potential to scale-up CBHI. |
| Keywords: | Bihar, Uttar Pradesh, community-based health insurance, enrollment, health microinsurance, rural India, self-help groups |
| Date: | 2013–03–30 |
| URL: | http://d.repec.org/n?u=RePEc:ems:euriss:39494&r=mfd |
| By: | Mebratie, A.D.; Sparrow, R.A.; Alemu, G.; Bedi, A.S. |
| Abstract: | Due to the limited ability of publicly financed health systems in developing countries to provide adequate access to health care, community-based health financing has been proposed as a viable option. This has led to the implementation of a number of Community- Based Health Insurance (CBHI) schemes, in several developing countries. To assess the ability of such schemes in meeting their stated objectives, this study systematically reviews the existing empirical evidence on three outcomes – access to schemes, effect on health care utilization and effect on financial protection. In addition to collating and summarizing the evidence we analyse the link between key scheme design characteristics and their effect on outcomes and comment on the role that may be played by study characteristics in influencing outcomes. The review shows that the ultra-poor are often excluded and at the same time there is evidence of adverse selection. The bulk of the studies find that access to CBHI is associated with increased health care utilization, especially with regard to the use of relatively cheaper outpatient care services as opposed to inpatient care. The schemes also appear to mitigate catastrophic healthcare expenditure. There are clear links between scheme design and effectiveness suggesting the importance of involving the target population in designing and implementing CBHI schemes. |
| Keywords: | catastrophic health expenditure, community health insurance, low-income groups |
| Date: | 2013–10–30 |
| URL: | http://d.repec.org/n?u=RePEc:ems:euriss:50087&r=mfd |
| By: | Glenn P. Jenkins (Department of Economics, Queen's University, Canada, Eastern Mediterranean University, Mersin 10, Turkey); Mikhail Miklyaev (Eastern Mediterranean University, Famagusta, Mersin 10, Turkey) |
| Abstract: | The objective of this study is to identify if the subsidized interest rates’ loans from micro-finance institutions in Ethiopia used to purchase and fatten small ruminants (lambs and kids) allow the poor households to substantially increase their annual income. A deterministic cost-benefit analysis of the base line scenario indicates that the proposed fattening scheme would result a satisfactory net present value. The high prices of feed in the country, however, suggest that the fattening calendar is an important variable. The study assess financial and economic benefits arising to the stakeholders of the activity and identifies key risky variables. This analysis points out that in the context of pro-poor interventions the loan schedule should be tied to the nature of the activity financed by the loan. The study proposes the suitable loan structure for the examined activity. High prices of commercial feed products along with the low scale of the activity do not allow the feeding scheme based on the highly nutrition commercial feed products. The study therefore is based on the free grazing feeding scheme with a limited quantity of supplementary feed. |
| Keywords: | cost-benefit analysis, investment appraisal, stakeholder analysis, small ruminants fattening, lamb and kids fattening, meat value chain, poverty reduction, sustainable development, access to finance, loan enabling intervention |
| JEL: | D13 D31 D61 D62 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:qed:dpaper:235&r=mfd |