nep-mfd New Economics Papers
on Microfinance
Issue of 2015‒08‒25
two papers chosen by
Olivier Dagnelie
Université de Namur

  1. Does Anti-Diversification Pay? A One-Sided Matching Model of Microcredit By Thilo Klein
  2. 'Women use their strength in the house': savings clubs in an Mpumalanga village By Deborah James

  1. By: Thilo Klein
    Abstract: In many economic situations, market participation requires that agents form groups subject to exogenous rules. Consider a microfinance institution that decides on rules for diversifying borrower groups in terms of their exposure to income shocks. Such rules affect group repayment by influencing both who matches with whom (direct effect) and who participates in the market (participation). I develop the key trade-off for conflicting predictions of extant theoretical models and estimate both effects separately. Group formation creates an endogeneity problem, but a matching model exploits the exogenous variation from counterfactual groups. I find that while diversification has no participation effect it has a significant positive direct effect.
    Keywords: microcredit; joint liability risk; diversification; market design; stable matching; endogeneity; selection model; agriculture; Thailand
    JEL: C11 C31 C34 C36 C78 D02 D82 G21 O16 Q14
    Date: 2015–07–19
  2. By: Deborah James
    Abstract: In settings of increased inequality, where rising prosperity for some spells penury for others, savings clubs enable new types of communality to be created – especially by women - which mediate, or are mediated by, new inequalities and dependencies. Changing gender dynamics and challenges to patriarchal authority, arising from apartheid-induced relocation and later the expansion of a somewhat gender-skewed state-grant system, now find expression in the relative autonomy enjoyed by some female civil servants and informal traders. More than simply ‘loose ends’ of apartheid’s homeland system, women’s savings clubs are being woven together into new fabrics of intensified solidarity. But not everyone can benefit equally from these sociable arrangements. Clubs occupy a point of intersection between two trends. One comprises modern roles and concerns associated with upward mobility in post-democratic South Africa. The other is evident in pockets of apparent informality and customary mutuality, where egalitarian sociability predominates. Setting out an arena linked to but discrete from that of capitalism, the clubs help members alternately accommodate and defy capitalism’s imperatives, while also fending off demands made by poorer relatives, neighbours, and those with too few resources to belong to clubs.
    JEL: N0
    Date: 2015–07–24

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