nep-mfd New Economics Papers
on Microfinance
Issue of 2015‒08‒01
five papers chosen by
Aastha Pudasainee and Olivier Dagnelie

  1. Direct Effects of Formal Savings Adoption on Agricultural Investments Among the Poor: Experimental Evidence from Malawi By Flory, Jeffrey A.
  2. Grants Vs Loans! What works best for young entrepreneurs? By Ibrahim, Kasirye; Madina, Guloba; Gemma, Ahaibwe; Elizabeth, Birabwa
  3. Credit, Technology Adoption and Collective Action in Tanzania’s Smallholder Dairy Sector By Twine, Edgar; Rao, Elizaphan; Baltenweck, Isabelle; Omore, Amos
  4. Reciprocity and Exclusion in Informal Financial Institutions: An Experimental Study of Rotating Savings and Credit Associations By Shimpei Koike; Mayuko Nakamaru; Tokinao OTAKA; Hajime Shimao; Ken-Ichi Shimomura; Takehiko Yamato
  5. Financial deepening and economic growth: A System GMM Panel Analysis with application to 7 SSA countries By Alimi, R. Santos

  1. By: Flory, Jeffrey A.
    Abstract: Work in progress, results are preliminary.
    Keywords: Microfinance, Savings Accounts, Agricultural Inputs, Household Production, Agricultural Finance, Consumer/Household Economics, Crop Production/Industries, Food Security and Poverty, International Development, Production Economics, D14, O12, O16, G21, Q12, Q14,
    Date: 2015–05
  2. By: Ibrahim, Kasirye; Madina, Guloba; Gemma, Ahaibwe; Elizabeth, Birabwa
    Abstract: Access to formal financial services remains limited in Uganda. Only 4 percent of the youth have access to formal credit institutions. As a result, youth are increasingly accessing microcredit to finance their business enterprises. However, several studies reviewed reveal that in-kind grants perform better than cash grants. In addition, impacts differ across gender with male youths registering more notable successes on business turnover than their female counterparts. Strict eligibility criteria, approval of business plans, family pressure, motivation, initial credit constraints and few initial assets were some of the contributing factors in driving gender differences of financial impacts.
    Keywords: Agribusiness, Community/Rural/Urban Development, Financial Economics, Industrial Organization, Institutional and Behavioral Economics, International Relations/Trade, Marketing, Production Economics, Research and Development/Tech Change/Emerging Technologies,
    Date: 2015–02
  3. By: Twine, Edgar; Rao, Elizaphan; Baltenweck, Isabelle; Omore, Amos
    Abstract: The study investigates the role of technology adoption and collective action in the demand for credit among dairy farmers in rural Tanzania. Using survey data from four districts in Tanga and Morogoro regions, the incidence of credit is found to be seven percent. Logit and tobit models based on a conceptual framework that assumes endogenously determined interest rates and nonseparability of production and consumption credit, are applied to the data. Interest rates are found to be exogenous and statistically insignificant in the demand for credit. The logit model shows collective action to positively influence the decision to borrow, but technology adoption is insignificant. From the tobit model, both collective action and technology adoption positively influence the amount of funds borrowed. We use these results to examine the observed failure of rural savings and credit cooperative societies to lend to smallholder dairy farmers and livestock keepers in general in Tanzania.
    Keywords: Credit, technology adoption, collective action, smallholder dairy farmers, Tanzania, Agricultural Finance, Community/Rural/Urban Development, Livestock Production/Industries, Research and Development/Tech Change/Emerging Technologies, Q13, Q14, Q16,
    Date: 2015–05
  4. By: Shimpei Koike (Department of Value and Decision Science, Tokyo Institute of Technology); Mayuko Nakamaru (Department of Value and Decision Science, Tokyo Institute of Technology); Tokinao OTAKA (Department of Social Engineering, Tokyo Institute of Technology); Hajime Shimao (Department of Value and Decision Science, Tokyo Institute of Technology); Ken-Ichi Shimomura (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan); Takehiko Yamato (Department of Social Engineering, Tokyo Institute of Technology)
    Abstract: Rotating savings and credit associations (Roscas) are worldwide informal financial institutions, in which all participants contribute to a fund and one of them receives it in rotation. A crucial problem is that participants have incentives to default on contributing after receiving the fund. We conducted an experiment and found that Roscas were sustained using a rule of excluding defaulters from the group by voting. We observed that group members behave reciprocally and revengefully: a member contributed (or did not contribute) to the fund of other members who had (or had not) contributed to theirs. This voluntary behavior sustained Roscas.
    Date: 2015–07
  5. By: Alimi, R. Santos
    Abstract: The relationship between financial development and economic growth has been a key study in economics field for a long time. This paper examines the link between financial development and economic growth in 7 Sub-Saharan African countries - Nigeria, South Africa, Lesotho, Malawi, Sierra Leone, Botswana and Kenya, over the period of 1981-2013. The study applied both static and dynamic panel data approach, to investigate the relation between financial development and economic growth. The results show that financial development has not led to economic growth in the panel of the selected countries when domestic credit provided by the banking sector is used as a proxy for financial development. The results thus lend support for the independent hypothesis postulates that financial development and economic growth are causally independent. Our study also considered foreign direct investment and interest rate as determinant of growth, but only interest rate suggested positive effect on economic growth. The implication of the results is that there is ardent need to develop the financial sector in order to stimulate real growth in the economies of these countries. Development of microfinance institutions as a complement to the conventional commercial banks will play a great role mobilising savings and providing ease access to fund, thus engendering growth process in the Sub-Saharan Africa.
    Keywords: Economic Growth; Financial Development; Generalized Method of Moments; Panel Data.
    JEL: G2 G21 O47
    Date: 2015–07

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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