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on Microfinance |
| By: | Bruno CREPON (ENSAE and J-PAL); Florencia DEVOTO (Paris School of Economics); Esther DUFLO (MIT Department of Economics and J-PAL); William PARIENTE (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and J-PAL) |
| Abstract: | This paper reports the results from a randomized evaluation of a microcredit program introduced in rural areas of Morocco starting in 2006 by Al Amana, the country’s largest microfinance institution. Al Amana was the only MFI operating in the study areas during the evaluation period. Thirteen percent of the households in treatment villages took a loan, and none in control villages. Among households identified as more likely to borrow based on ex-ante characteristics, microcredit access led to a significant rise in investment in assets used for self-employment activities (mainly animal husbandry and agriculture), and an increase in profit. But this increase in profit was offset by a reduction in income from casual labor, so overall there was no gain in measured income or consumption. We find suggestive evidence that these results are mainly driven by effects on borrowers, rather than by externalities on households that do not borrow. This implies that among those who chose to borrow, microcredit had large, albeit very heterogeneous, impacts on assets and profits from self-employment activities, but small impact on consumption: we can reject an increase in consumption of more than 10% among borrowers, two years after initial rollout. |
| Date: | 2014–05–14 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvir:2014012&r=mfd |
| By: | Julian C. Jamison; Dean Karlan; Jonathan Zinman |
| Abstract: | Evidence on the effectiveness of financial education and formal savings account access is lacking, particularly for youth. We randomly assign 250 youth clubs to receive either financial education, access to a cheap group account, or both. The financial education treatments increase financial literacy; the account-only treatment does not. Administrative data shows the education plus account treatment increases bank savings relative to account-only. But survey-measured total savings shows roughly equal increases across all treatment arms. Earned income also increases in all treatment arms. We find little evidence that education and account access are strong complements, and some evidence they are substitutes. |
| JEL: | D12 D91 O12 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20135&r=mfd |
| By: | Sougata Ray (cef.up, University of Porto, Portugal and Amrita School of Business, Coimbatore, India); Sushanta Kumar Mahapatra (Department of Economics, University of Bologna, Bologna, Italy and Amrita School of Business, Amrita University, Coimbatore, India) |
| Abstract: | The Indian Microfinance Industry witnessed one of the fastest growths in the recent times. However, the sticking feature of the growth is that the Microfinance Institutions (MFIs) are concentrated in only some regions of the country. There is a huge geographical skew in the distribution of the MFIs. In this paper an attempt has been made to explain these geographical skew by using the macro variables at the state levels. The purpose of this study is to identify the causes for the regional disparity of the growth of MFIs. The analysis is likely to help in identifying factors which need attention for developing the MFIs in states which are lagging behind and also in framing necessary regulations which can ensure uniform growth of MFIs among all the states. The study suggests that state level macro factors are significant in explaining the geographical skew. MFIs in India have concentrated in states which are richer, have good rural infrastructure, lack adequate banking facility and have low human capital. |
| Keywords: | Microfinance Institutions, Penetration, Regional disparity, Macro variables |
| JEL: | G21 E44 R5 E44 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:por:cetedp:1401&r=mfd |
| By: | Thorsten Beck; Haki Pamuk; Burak R. Uras |
| Abstract: | What is the relationship between entrepreneurial saving practices and reinvestment? We develop a model of entrepreneurial finance and show that entrepreneurial reinvestment decisions depend on the efficiency of saving practices. Utilizing a novel micro & small enterprise survey from Tanzania we test the empirical implications of this theory. We find (1) saving for business purposes and earnings reinvestment are positively related; (2) the practice of saving in a deposit account of a formal financial institution is more likely to facilitate reinvestment compared to the practice of keeping savings within the household. We also show that the negative impact of saving within-the-household on investment is more pronounced for family members with inherently low intra-household bargaining power - such as females and non-head household members. Our work contributes to the recent debate on the implications of saving instruments in developing countries, and suggests informal saving practices as potential barriers to microenterprise performance. |
| Keywords: | Micro- and small enterprises; savings; reinvestment; Tanzania |
| JEL: | D14 G21 O12 O16 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:csa:wpaper:2014-15&r=mfd |