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on Microfinance |
| By: | Felipe Kast (Centro de Estudios Horizontal); Dina Pomeranz (Harvard Business School, Entrepreneurial Management Unit) |
| Abstract: | Poverty is often characterized not only by low and unstable income, but also by heavy debt burdens. We find that reducing barriers to saving through access to free savings accounts decreases participants' short-term debt by about 20%. In addition, participants who experience an economic shock have less need to reduce consumption, and subjective well-being improves significantly. Precautionary savings and credit therefore act as substitutes in providing self-insurance, and participants prefer borrowing less when a free formal savings account is available. Take-up patterns suggest that requests by others for participants to share their resources may be a key obstacle to saving. |
| JEL: | D14 D91 G22 O16 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:hbs:wpaper:14-001&r=mfd |
| By: | Altınok, Ahmet; Sever, Can |
| Abstract: | Peer-group mechanisms have been widely used by micro-credit institutions to minimize default risk. However, there are costs associated with establishing and maintaining liability groups. In the case when output is fully observable, we propose a dynamic individual lending mechanism. Assuming that risky borrowers discount the future costs and benefits relatively higher, our mechanism performs equally well in repayment rates, distinguishes safe and risky borrowers through differentiated interest rates and payment schedules. In case of unobservable types, it is able to eliminate adverse selection problem, and it reaches the first best outcome of the case that types of borrowers are publicly known. It improves wealth of individuals, and hence achieves a net welfare-superior outcome when compared with joint liability. Individual lending further saves from internal costs of group formation, and broadens the fractions of society into which microfinance institutions penetrate. We also identify unique welfare maximizing contract in our mechanism. Finally, we introduce a history dependent success probabilities, and show existence of efficient individual contract in that environment. |
| Keywords: | Microfinance, Graamen bank, joint liability, adverse selection, microlending, group lending, individual lending |
| JEL: | D60 D86 G21 O1 O12 |
| Date: | 2014–05–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:56598&r=mfd |
| By: | Janda, Karel; Zetek, Pavel |
| Abstract: | This survey article provides a brief but comprehensive overview of microfinance academic literature with emphasis on recent innovations, trends and efficiency. In particular, we focus on controversial issues of microfinance, such as commercialization, regulation, interest rate policy and the balance between outreach and performance of MFIs. In summary, the findings of the reviewed literature underline the great improvement in the microfinance field that, however, has not reached its full potential yet. At the same time, we outline potential risks and drawbacks which are being discovered along the way of microfinance development and maturing, many of which still waiting for more rigorous scholarly examination. The paper also contains an illustrative econometric model of the relation between social and financial efficiency. |
| Keywords: | Microfinance, microcredit, efficiency, mission drift |
| JEL: | G21 O11 O12 O16 |
| Date: | 2014–06–13 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:56657&r=mfd |
| By: | Günther Fink; B. Kelsey Jack; Felix Masiye |
| Abstract: | Small-scale farming remains the primary source of income for a majority of the population in developing countries. While most farmers primarily work on their own fields, off-farm labor is common among small-scale farmers. A growing literature suggests that off-farm labor is not the result of optimal labor allocation, but is instead driven by households’ inability to cover short-term consumption needs with savings or credit. We conduct a field experiment in rural Zambia to investigate the relationship between credit availability and rural labor supply. We find that providing households with access to credit during the growing season substantially alters the allocation of household labor, with households in villages randomly selected for a loan program selling on average 25 percent less off-farm labor. We also find that increased credit availability is associated with higher consumption and increases in local farming wages. Our results suggest that a substantial fraction of rural labor supply is driven by short-term constraints, and that access to credit markets may improve the efficiency of labor allocation overall. |
| JEL: | J22 O16 Q12 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20218&r=mfd |
| By: | Delavallade, Clara |
| Abstract: | This paper examines an innovative approach to access to and demand for quality health care from the poor. Using data from a field experiment in India, I examine the impact of high-quality care experiences in the form of a free medical consultation with a qualified nongovernmental organization doctor, randomly offered by a health insurance provider to a subset of its enrollees. |
| Keywords: | health care, Poverty, Insurance, health insurance, trust, insurance retention, micro health insurance, insurance demand, |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:1352&r=mfd |