nep-mfd New Economics Papers
on Microfinance
Issue of 2014‒10‒22
three papers chosen by
Aastha Pudasainee and Olivier Dagnelie

  1. Microcredit as insurance: Evidence from Indian Self-Help Groups By Timothée Demont
  2. The Miracle of Microfinance Revisited: Evidence from Propensity Score Matching By Inna Cintina; Inessa Love
  3. Women’s Empowerment in Bangladesh: A Case Study of Two NGOs By Mohammad Samiul Islam

  1. By: Timothée Demont (CERDI, University of Auvergne)
    Abstract: In developing countries, most poor households experience extremely variable in-come because of a large exposure to climatic, economic and policy shocks, combined with a lack of appropriate insurance devices. Extreme weather events, in particular, are projected to become more frequent in a warming climate, leaving rainfed agriculture and large populations in developing countries at risk. In this context, reliable access to finance in general and credit in particular can potentially bring welfare-improving opportunities to smooth household consumption. This paper documents the extent and the nature of the reactions to rainfall shocks that can be attributed to the participation to informal savings and credit groups in villages of Northern India. I exploit first-hand panel data measuring the living standards of member and control households, coupled with meteorological data at the district-level. I find that agricultural production and income are very dependent on the monsoon quality. Interestingly, while the access to credit collapses for control households after a bad monsoon, Self-Help Groups (SHGs) appear to be robust credit sources that offer to member households the possibility to increase borrowing in order to cope with shocks, even when those are largely covariate within the village. This in turn implies a higher degree of food security over the year and a lower need for temporary migration following a large negative shock. Finally, I review some noteworthy features that allow SHGs to withstand covariate shocks, though potentially at a cost in terms of longer-term insurance.
    Keywords: Microfinance, climate shocks, income smoothing, risk-coping strategies
    JEL: O13 O15 G21 Q54
    Date: 2014–10
  2. By: Inna Cintina (University of Hawai‘i at Manoa); Inessa Love (University of Hawai‘i at Manoa)
    Abstract: We provide new evidence on the effectiveness of microfinance intervention for poverty alleviation. We apply the Propensity Score Matching (PSM) method to data collected in a recent randomized control trial (RCT) in India by Banerjee et al. (2014). The PSM method allows us to answer an additional set of questions not answered by the original study. First, we explore the characteristics of MFI borrowers relative to two comparison groups: those without any loans and those with other types of loans, predominantly from family and friends and money lenders. Second, we compare the impact on expenditures of MFI borrowers relative to these two comparison groups. We find that microfinance borrowers have higher expenditures in a number of categories, notably durables, house repairs, health, festivals and temptation goods. The differences are stronger relative to those without any loans. Our results suggest that microfinance can make a larger difference for households previously excluded from other credit sources. However, some of the increased expenditures are unlikely to lead to long-term benefits and there is no significant difference in total expenditures. We also present suggestive evidence of negative spillovers, i.e. non-participants reducing some categories of expenditures, while MFI participants "pick up the tab."
    Date: 2014–09
  3. By: Mohammad Samiul Islam (Department of Public Administration, Shahjalal University of Science and Technology (SUST), Sylhet-3114, Bangladesh)
    Abstract: Empowerment of women is a holistic concept. It is a multi-dimensional approach and it covers social, political, and economic aspects. This paper used questionnaires and focus group discussions to shed light on the question if non-governmental organizations (NGOs) have increased women’s empowerment in Bangladesh. Looking at two study areas and two NGOs (the Friends in Village Development Bangladesh (FIVDB) and Nari Uddug Kendra (NUK)), the results of the case study show that these two NGOs have helped women with economic empowerment, but that progress with women’s overall empowerment has been limited.
    Keywords: gender, women, empowerment, microcredit, Bangladesh
    Date: 2014–09

This nep-mfd issue is ©2014 by Aastha Pudasainee and Olivier Dagnelie. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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