nep-mfd New Economics Papers
on Microfinance
Issue of 2015‒02‒11
three papers chosen by
Olivier Dagnelie
Université de Namur

  1. Just a few cents each day: can fixed regular deposits overcome savings constraints? By Anett John
  2. Is there Discrimination Against Women Entrepreneurs in Formal Credit Markets in Nigeria? By Emmanuel O. Nwosu; Anthony Orji; Vivian Nwangwu; Chioma Nwangwu
  3. Measuring impact: preliminary insights from interviews with impact investors By Neil Reeder; Gemma Rocyn Jones; John Loder; Andrea Colantonio

  1. By: Anett John
    Abstract: Empirical evidence suggests that there is a high demand for informal savings mechanisms even though these often feature negative returns - such as deposit collectors, ROSCAs, microloans, and informal borrowing. This paper argues that individuals may face even higher negative returns to saving at home due to hyperbolic discounting and claims on savings by relatives. I outline a model that shows why hyperbolic discounters cannot reach their welfare-maximising level of savings, and why a commitment savings product with fixed period contributions can increase their achievable savings level. Using a novel dataset obtained from a small microfinance institution in Bangladesh, the paper then presents some first empirical evidence on the effects of a commitment savings product with fixed regular instalments. I find that the introduction of the regular saver product was associated with an increase in individuals’ savings contributions of 180 percent after a periods of five months. The paper concludes that the provision of commitment savings products with fixed contributions may reduce savings constraints and increase individuals’ welfare, providing a substitute for costly informal mechanisms. However, since the data originates from a field study with self-selection problems rather than a randomized controlled experiment, further studies are needed to confirm this effect.
    Keywords: commitment savings; hyperbolic discounting; Bangladesh
    JEL: J1
    Date: 2014–03
  2. By: Emmanuel O. Nwosu; Anthony Orji; Vivian Nwangwu; Chioma Nwangwu
    Abstract: This research investigates whether women entrepreneurs in small and medium-sized enterprise (SMEs) in Nigeria are marginalised in formal credit markets compared to their male counterparts. The study also investigates the impact of credit access on the performance of enterprises. The study uses Nigerian Enterprise Surveys data from 2010 to construct a direct measure of credit constraints in order to address the objectives. A probit credit constraint model was estimated, and nonlinear decomposition methods as well as propensity score matching methods were employed in the analyses. Our results did not show significant discrimination against women in formal credit markets in Nigeria. The results reveal that firms that are not credit constrained in the formal credit market perform measurably better in terms of output, output per worker and the decision to invest/expand, compared to firms that are constrained. Our results also show that access to formal credit by small and medium enterprises in Nigeria is still very low. The policy implications, among others, are that government and monetary authorities should support credit expansion policies for medium and small enterprises by creating an enabling environment for financial intermediation in Nigeria. Also, intervention funds targeted specifically at medium and micro enterprises would help to ease credit constraints.
    Keywords: gender, discrimination, credit, constraint, performance, access
    JEL: O16 O17
    Date: 2015
  3. By: Neil Reeder; Gemma Rocyn Jones; John Loder; Andrea Colantonio
    Abstract: This research paper – the second of LSE Cities’ Measuring impact beyond financial return research project, draws out points of convergence and divergence in approaches to impact measurement. Testing out hypotheses set out in the first research paper, it is based on information derived from a series of interviews with established impact investors in the fields of the environment; social enterprise; microfinance; and social impact bonds. We see emerging signs of three types of impact investors – those that are focused on system building, those that assess each investment on a case by case basis, and those that follow the evidence of what works. Other key themes emerging are that there seems to be a relatively low level of engagement between impact investors and the ultimate beneficiaries of their social impact; and that the connections, actual or perceived, between non-financial and financial returns are a key factor in determining what impact gets measured, and the effort put into measurement.
    JEL: F3 G3
    Date: 2014–04

This nep-mfd issue is ©2015 by 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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