nep-mfd New Economics Papers
on Microfinance
Issue of 2015‒07‒18
six papers chosen by
Aastha Pudasainee and Olivier Dagnelie

  1. The Effect of Savings Accounts on Interpersonal Financial Relationships: Evidence from a Field Experiment in Rural Kenya By Pascaline Dupas; Anthony Keats; Jonathan Robinson
  2. Managing risk with insurance and savings: Experimental evidence for male and female farm managers in West Africa: By Delavallade, Clara; Dizon, Felipe; Hill, Ruth Vargas; Petraud, Jean Paul
  3. Financial institutions and supply of financial services in the European microcredit market: a survey of selected countries’ experiences By Sergio Lagoa
  4. Types of financial institution and their supply of financial services: the case of microfinance in Europe By Sergio Lagoa; Abdul Suleman
  5. Working Paper 225 - Measuring the Impact of Micro-Health Insurance on Healthcare Utilization: A Bayesian Potential Outcomes Approach By AfDB AfDB
  6. Financial Inclusion, Regulation, and Education in Germany By Neuberger, Doris

  1. By: Pascaline Dupas; Anthony Keats; Jonathan Robinson
    Abstract: The welfare impact of expanding access to bank accounts depends on whether accounts crowd out pre-existing financial relationships, or whether private gains from accounts are shared within social networks. To study the effect of accounts on financial linkages, we provided free bank accounts to a random subset of 885 households. Within households, we randomized which spouse was offered an account and find no evidence of negative spillovers to spouses. Across households, we document positive spillovers: treatment households become less reliant on grown children and siblings living outside their village, and become more supportive of neighbors and friends within their village.
    JEL: C93 D14 G21 O16
    Date: 2015–07
  2. By: Delavallade, Clara; Dizon, Felipe; Hill, Ruth Vargas; Petraud, Jean Paul
    Abstract: While there is a fast-growing policy interest in offering financial products to help rural households manage risk, the literature is still scant as to which products are the most effective. In order to inform gender targeting of rural finance policy, this paper investigates which financial products best improve farmers’ productivity, resilience, and welfare, and whether benefits affect men and women equally. Using a randomized field experiment in Senegal and Burkina Faso, we compare male and female farmers who are offered index-based agricultural insurance with those who are offered a variety of savings instruments. We found that female farm managers were less likely to purchase agricultural insurance and more likely to invest in savings for emergencies, even when we controlled for access to informal insurance and differences in crop choice. We hypothesize that this difference results from the fact that although men and women are equally exposed to yield risk, women face additional sources of life cycle risk—particularly health risks associated with fertility and childcare—that men do not. In essence, the basis risk associated with agricultural insurance products is higher for women. Insurance was more effective than savings at increasing input spending and use. Those who purchased more insurance realized higher average yields and were better able to manage food insecurity and shocks. This suggests that gender differences in demand for financial products can have an impact on productivity, resilience, and welfare.
    Keywords: Risk, Insurance, Gender, Women, Finance, savings, economic shocks, resilience,
    Date: 2015
  3. By: Sergio Lagoa (Instituto Universitário de Lisboa – ISCTE and Dinamia’CET-IUL)
    Abstract: In this paper we review the country experiences of eight national European microfinance markets in order to study the impact of different types of financial institutions in the supply of financial services. Our study shows that national differences are large and the most important institutions are distinct in each country. The general economic environment affects the development of microfinance, and there is some substitutability between the formal banking sector and the microcredit sector. Nevertheless, the collaboration of Microfinance Institutions (MFIs) with banks (commercial banks and savings banks) and the participation of banks in the microcredit sector is a factor that enhances the growth of the market. The public sector, the non-for-profit MFIs, savings banks, cooperative banks, and CUs are one of the main drivers of growth in the microcredit sector. However, there is a large dependence of institutions on public funds, and they may not be able to sustain their activities if these funds cease. An increase of institutions’ specialisation and dimension are important steps to improve their financial sustainability. Local presence through a network of branches seems to be important for MFIs success. Local knowledge can also be achieved by collaborating with social support institutions that help to reduce operational costs and screen and support clients.
    Keywords: microfinance, financial institutions
    JEL: G21
    Date: 2014–11–01
  4. By: Sergio Lagoa (Instituto Universitário de Lisboa – ISCTE and Dinamia’Cet-IUL.); Abdul Suleman (Instituto Universitário de Lisboa – ISCTE and BRU-IUL)
    Abstract: The profit-oriented financial sector has grown in importance and influence, leading some authors to talk about a financialised economy. The question we raise in this paper is what is the role of non-profit oriented financial institutions and public programmes in the microfinance segment. We conclude that in this market there is a large diversity of institutions and non-for profit organisations have a significant role. Our analysis also shows that the diversity of institutional forms is important to foster market dimension, guarantee a good cover of the several vulnerable groups and a diversified offer of other services besides microcredit. Moreover, some specific institutions have an effect on the composition of the market in terms of personal and business loans, on loans terms, loans size, credit to targeted clients, and offer of other financial services. Moreover, we study how financial institutions cluster around some key variables. Finally, we fuzzy cluster microcredit national markets and describe how institutions types differ across the clusters.
    Keywords: microfinance, financial institutions
    JEL: G21
    Date: 2014–11–01
  5. By: AfDB AfDB
    Date: 2015–07–08
  6. By: Neuberger, Doris (Asian Development Bank Institute)
    Abstract: Germany’s bank-based financial system provides a high level of financial inclusion, measured by bank outreach and use of financial services. However, the most vulnerable individuals and small enterprises in Germany tend to be excluded or credit constrained. The quality of financial inclusion is impaired by a low level of financial literacy, which is also concentrated among specific population subgroups. The high level of financial inclusion can be attributed to relationship lending by public savings banks, credit cooperatives, public promotional banks, and guarantee banks using the “housebank” model, and financial consumer protection and credit reporting regulations and institutions. Programs involving microfinance institutions have been stopped. Financial inclusion of consumers with the aim of responsible finance may be improved by implementing the right to a basic bank account with an overdraft facility and protection against attachment, establishing public credit bureaus, redirecting banking regulation toward the protection of borrowers in long-term credit relationships, and strengthening financial education in schools. To foster entrepreneurship and access to funding for start-ups and innovative SMEs, entrepreneurship education and the venture capital market need to be further developed.
    Keywords: bank outreach; credit constraints; relationship lending; banking regulation; financial literacy
    JEL: G21 G28 I22 O16
    Date: 2015–07–09

This nep-mfd issue is ©2015 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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