nep-mfd New Economics Papers
on Microfinance
Issue of 2014‒10‒03
two papers chosen by
Olivier Dagnelie
Université de Namur

  1. Self-Selection into Credit Markets: Evidence from Agriculture in Mali By Lori Beaman; Dean Karlan; Bram Thuysbaert; Christopher Udry
  2. Formando microempresarias: los servicios de desarrollo de negocio para reforzar el impacto de los microcréditos By Olga Biosca Artiñano

  1. By: Lori Beaman (Northwestern University); Dean Karlan (Economic Growth Center, Yale University); Bram Thuysbaert (Ghent University); Christopher Udry (Economic Growth Center, Yale University)
    Abstract: We partnered with a micro-lender in Mali to randomize credit offers at the village level. Then, in no-loan control villages, we gave cash grants to randomly selected households. These grants led to higher agricultural investments and profits, thus showing that liquidity constraints bind with respect to agricultural investment. In loan-villages, we gave grants to a random subset of farmers who (endogenously) did not borrow. These farmers have lower – in fact zero – marginal returns to the grants. Thus we find important heterogeneity in returns to investment and strong evidence that farmers with higher marginal returns to investment self-select into lending programs.
    Keywords: credit markets, agriculture, returns to capital
    JEL: D21 D92 O12 O16 Q12 Q14
    Date: 2014–05
  2. By: Olga Biosca Artiñano (Yunus Centre for Social Business and Health, Glasgow Caledonian University)
    Abstract: Recent microfinance crises have put into question the effectiveness of microfinance for poverty alleviation. In this context, non-financial services supplied by microfinance institutions re-emerge as a mechanism to strengthen microfinance’s effect on wellbeing through human capital formation. By exploiting a natural experiment, this paper measures the marginal impact of an internationally standardized business development program supplied by a Mexican microfinance institution to female business owners. The treatment group had received for a year from 30 to 45 minute sessions after credit repayment meetings. Using a double differences method, it can be observed that the program does not have the expected effects on key variables such as revenues. There is a positive impact on good business practices, but also the risk of an increase of informality.
    Keywords: microfinance, business development services, human capital, education, business managment
    JEL: C31 I25 J24 O12 O15 O16
    Date: 2014–08–27

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