nep-mfd New Economics Papers
on Microfinance
Issue of 2015‒12‒20
six papers chosen by
Aastha Pudasainee and Olivier Dagnelie

  1. Microcredit and Poverty Reduction in Bangladesh: Beyond Publication Bias, Does Genuine Effect Exist? By Awaworyi Churchill, Sefa; Korankye Danso, Jeffrey; Appau, Samuelson
  2. Microfinance Institution Performance: Does the Macro-economy matter? By Awaworyi Churchill, Sefa; Korankye Danso, Jeffrey; Nyatefe, Elikem
  4. Changing saving and investment behavior: the impact of financial literacy training and reminders on micro-businesses By ABEBE, Girum; TEKLE, Biruk; MANO, Yukichi
  5. Determinantes del acceso al crédito de las PYMES en Colombia By Héctor Alberto Botello Peñaloza
  6. Credit Unions in Romania – a strong social enterprise model to combat financial exclusion and over indebtedness By Cristina BARNA; Ancuta VAMEsU

  1. By: Awaworyi Churchill, Sefa; Korankye Danso, Jeffrey; Appau, Samuelson
    Abstract: We review the empirical evidence on the impact of microcredit on poverty in Bangladesh. Drawing on evidence from seven empirical studies with 306 estimates, we examine the impact of microcredit on three proxies of poverty – income, assets and consumption/expenditure. After addressing issues of publication selection bias, we find that microcredit has a statistically insignificant effect on income, and also on assets. Evidence shows a positive but weak effect of microcredit on consumption/expenditure. Meta-regression analysis reveals that sources of variations in the existing literature such as study design, data characteristics and empirical methodology can explain the differences in reported estimates.
    Keywords: Microfinance,Poverty,Bangladesh,Meta-analysis
    JEL: G21 I32 I38
    Date: 2015–12–07
  2. By: Awaworyi Churchill, Sefa; Korankye Danso, Jeffrey; Nyatefe, Elikem
    Abstract: Microfinance Institutions (MFIs) have been compared at various levels for the purpose of replications and policy formulations. However, the potential effects of the macro-economy on MFI performance are often not considered. We propose that understanding the possible effects of country-level factors on MFI performance can help provide a more accurate evaluation and explain where microfinance fits in the development process. Based on data collected on 563 MFIs, merged with country-level macroeconomic and macro-institutional data, we examine the effects of the macro-economy on MFI performance, specifically, financial and outreach performance as well as default and interest rates. Results suggest that high economic growth is associated with better MFI performance. However, other modes of economic development, including wage-employment opportunities, appear to impede MFI growth, especially outreach growth. Evidence also arises for the rivalry between MFI performance and better institutions. Overall, we find that the success of MFIs depend on macro-economic and institutional factors, although it is likely observed effects may differ by geographical location.
    Keywords: microfinance,economic growth,financial performance,sustainability,outreach
    Date: 2015–12–07
  3. By: Yaya KOLOMA (École Supérieure d’Agro-développement International : ISTOM); Zaka RATSIMALAHELO (Université de Bourgogne Franche-Comté, CRESE)
    Abstract: This paper focuses on the link between young people's access to microcredit and performance of their business by asking whether the performance of their microenterprise can be explained by access or lack of access to microcredit. Using the survey data conducted by INSTAT and ODHD Mali among the recipients of microfinance services in 2007-2008, we, firstly, give a descriptive approach to analyze micro financing conditions and performance indicators. The propensity score matching is then used to estimate both the determinants of access to credit and the effects of access on the performance of micro-enterprises.
    Keywords: Young people, Microcredit, Microenterprises, Efficiency, Mali
    JEL: I3 J16 C2 G21
    Date: 2015–12
  4. By: ABEBE, Girum; TEKLE, Biruk; MANO, Yukichi
    Abstract: In developing countries, savings is an important financial tool, particularly for micro-business with limited access to credit. However, micro-entrepreneurs often undersave, even when they have some surplus and the desire to save may be because of a knowledge gap and behavioral biases. We employed an experimental approach relaxing these savings constraints to explore the effects of providing financial literacy training and reminders to micro-entrepreneurs in Ethiopia. While financial literacy training alone seemed ineffective, the reminders significantly increased the savings-to-sales ratio by 54.5%, the percentage of business proceeds reinvested back to business by 91.0 %, and the percentage of savings goal achieved by 116%. Joint treatment significantly increased the percentage of savings goal achieved by 66.5% and deposit in an ordinary bank account by 84%. Our results confirm earlier findings that savings can be limited by attention, whereas how entrepreneurs manage savings depends on their levels of financial literacy [151 words].
    Keywords: savings, reminders, financial training, entrepreneurs
    JEL: D92 E21 L26
    Date: 2015–12–08
  5. By: Héctor Alberto Botello Peñaloza
    Abstract: El presente artículo investiga sobre los determinantes del acceso al crédito de las PYMES en Colombia entre 2006 y 2010. La metodología incluye el diseño de un modelo probabilístico conformado por las características internas y externas de una muestra de 85 mil empresas. Las estimaciones evidencian que el tamaño y la capacidad tecnológica son las variables que más influyen para que una empresa pueda acceder a los mercados de financiamiento debido a su habilidad para generar ventajas competitivas, permitiéndoles ganar competitividad en los mercados y con esto asegurar la creación de flujos de caja sostenibles. Factores que serán tomados por los oferentes de crédito como la mejor garantía para la devolución del préstamo.
    Keywords: Financiamiento, mercados financieros, modelos probabilísticos, PYMES
    JEL: D01 D02 D1 G21
    Date: 2015–09–01
  6. By: Cristina BARNA (Institute of Social Economy - Civil Society Development Foundation, Romania); Ancuta VAMEsU (Institute of Social Economy Coordinator - Civil Society Development Foundation, Romania)
    Abstract: Credit unions are social economy entities that have an important contribution to preventing financial and social exclusion in Romania. Historically, we can speak about credit unions in Romania from XVIII century in Transylvania, until present. These social economy entities have been a considerable support during all these times for persons with low income in Romania, being credible institutions in the communist period, and also after 1990 Revolution, facing successfully all turbulent economic transformations and global challenges, adapting and developing themselves continuously until present, when they begin to embrace microfinance and adopt the European Code of good-practice in micro-finance. They have the potential to become a successful social economy model, very instrumental in providing affordable loans and safe saving and also contributing to local development through support for entrepreneurship and job creation. Our paper has as objective to describe and analyze the specificity of Romanian credit union model, that could be seen in the same time as a social innovation, with a big multiplier effect in economy and society, generating inclusive growth and development; an overview of the dynamics of the sector, considering the most recent available statistical data. The paper will include the preliminary research results of the project “ICAR - inclusion by micro-credit and mutual help - sustainable strategy of social economy for employment and creation of social enterprises”, financed by European Social Fund - Human Resources Operational Programme, ID 148102, regarding the general context of access to financial services in Romania, financial exclusion and over-indebtedness.
    Keywords: credit union, financial exclusion, social exclusion, social economy, mutual financial help, micro-credit
    Date: 2015–11

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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