nep-mfd New Economics Papers
on Microfinance
Issue of 2014‒03‒30
two papers chosen by
Olivier Dagnelie
University of Namur

  1. Dynamic effects of microcredit in Bangladesh By Khandker, Shahidur R.; Samad, Hussain A.
  2. The Cost of Empowerment: Multiple Sources of Women’s Debt in Rural India By Supriya Garikipati; Isabelle Agier; Isabelle Guérin; Ariane Szafarz

  1. By: Khandker, Shahidur R.; Samad, Hussain A.
    Abstract: This paper uses long panel survey data spanning over 20 years to examine the dynamics of microcredit programs in Bangladesh. With the phenomenal growth of microfinance institutions representing 30 million members with over $2 billion of annual disbursement over the past two decades, it is important to understand the dynamics of microcredit expansion and its induced impact on household welfare. A dynamic panel model is used to address a number of issues, such as whether credit effects are declining over time, whether market saturation and village diseconomies are taking place, and whether multiple program membership, which is rising as a consequence of microcredit expansion, is harming or benefiting the borrowers. The paper's results confirm that microcredit programs have continued to benefit the poor by raising household welfare. The beneficial effects have also remained higher for female than male borrowers. There are diseconomies of scale caused by higher levels of village-level borrowing, especially for male members. Multiple program membership is also growing with competition from microfinance institutions, but this has rather helped raise assets and net worth more than it has contributed to indebtedness.
    Keywords: Banks&Banking Reform,Labor Policies,Economic Theory&Research,Debt Markets,Science Education
    Date: 2014–03–01
  2. By: Supriya Garikipati; Isabelle Agier; Isabelle Guérin; Ariane Szafarz
    Abstract: Poor women borrow from multiple sources. This study examines whether the source of debt matters for women’s role in household financial decisions. Drawing on a household survey from rural Tamil Nadu, we categorise women’s loans along the lines of accessibility and formality into ‘planned loans’ and ‘instant loans’. We find that ‘instant loans’ support women’s bargaining power in various types of household financial decisions, whereas ‘planned loans’ have no impact. This surprising result is better understood when the nature of ‘instant loans’ is examined – these are frequently usurious, involve coercive enforcement methods and considered socially debasing. Hence women who use them perform a convenient role for their husbands and in return gain some negotiating power.
    Keywords: Debt; Women’s Empowerment; Microfinance; Tamil Nadu; India
    JEL: G24 L26 O16 M13
    Date: 2014–03–27

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