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on Microfinance |
| By: | Bruno Crépon; Florencia Devoto; Esther Duflo; William Pariente |
| 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. |
| JEL: | D21 G21 O16 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20144&r=mfd |
| By: | Sengsourivong, Kongpasa; Mieno, Fumiharu |
| Abstract: | Based on original household survey on the six villages in Vientiane vicinity in 2005, the paper investigates the impact of Savings and Credit Union (SCU) programs on household income, expenditure and asset, applying the methodology of Coleman's (1999) study on Thailand to address placement bias and endogeneity problem. The results revealed that SCU programs brought certain changes; SCUs boosted educational expenditures implying activation of human capital formation, increased the house asset suggesting villagers' investment reflected by possible business activation, and brought a possible shift in income sources from traditional agriculture to livestock raising. The paper interprets these results different from Coleman's (1999) in two possible ways; First the Laotian case is to an extent, free from a bias associated with seed capital allocation, therefore is more suitable to capture the effect than Thailand, and second it is since the stage of financial accessibility in Laos is far less developed than in Thailand. |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:hit:primdp:55&r=mfd |
| By: | Ha van Dung (University of Paderborn) |
| Abstract: | This study investigates the impacts of short-term precautionary selection and insurance on household decisions regarding the participation in different kinds of saving mechanisms in rural Vietnam. The two-part model is employed for the analysis and unlike other studies I investigate household decisions regarding both, participation and contribution to formal and informal saving intermediaries. Furthermore we control for the endogeneity of the short-term precautionary motive and of insurance in the model of household contribution. The finding suggests that the short-term precautionary motive reduces the household probability to engage into formal and informal saving intermediaries. In addition, insurance is found to be a substitute for short-term precautionary savings. Concerning the contribution aspect, the short-term precautionary motive is found to reduce the participant’s deposits in formal saving intermediaries while there is no evidence for insurance in influencing household contribution to saving intermediaries. |
| Keywords: | Short-term precautionary motive, insurance, saving intermediaries, cash hoarding, deposits |
| JEL: | O12 O16 O17 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:pdn:ciepap:82&r=mfd |
| By: | Thomas Gries (University of Paderborn); Ha van Dung (University of Paderborn) |
| Abstract: | In this paper, we investigate the role of the social network nexus and the insurance nexus in determining household savings and productive capital formation in rural Vietnam. We analyze the issue in two dimensions, stocks and flows, and consider the exposure to negative shocks. The instrumental variable method is employed and unlike previous studies, we account for the endogeneity of all concerned variables. The results indicate that the social network nexus has more impacts in “ex ante” rather than in “ex post” households. In both households groups, the effects of the insurance nexus dominate over those of the social network nexus. In the case of the stocks, we also find that the precautionary view is held in liquid assets but not in productive assets. |
| Keywords: | rural households, liquid assets, productive assets, social networks, organizations, insurance, disasters |
| JEL: | O12 O16 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:pdn:ciepap:81&r=mfd |
| By: | Gine, Xavier; Martinez Cuellar, Cristina; Mazer, Rafael Keenan |
| Abstract: | An audit study was conducted in peri-urban Mexico to understand the quality of information and products offered to low-income potential customers. Trained auditors visited multiple financial institutions seeking credit and savings products. Consistent with Gabaix and Laibson (2006), staff voluntarily provides little information about avoidable fees, especially to auditors trained to reveal little knowledge about the market. In addition, clients are almost never offered the cheapest product, most likely because staff is incentivized to offer more expensive products that are thus more profitable to the institution. This suggests that disclosure and transparency policies may be ineffective if they undermine the commercial interest of financial institutions. |
| Keywords: | Financial Literacy,Access to Finance,Banks&Banking Reform,Insurance&Risk Mitigation,Emerging Markets |
| Date: | 2014–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6902&r=mfd |