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on Microfinance |
| By: | Czura, Kristina |
| Abstract: | Microcredit institutions typically apply rigid and fixed repayment schedules when disbursing loans in order to reduce transaction costs, simplify procedures, and inculcate fiscal discipline for better repayment behavior. Microcredit clients, however, often have neither smooth income nor singular moments in which to make lumpy investments throughout the year. This mismatch generates a cash flow disconnect and, given the presumed liquidity constraints of the typical microcredit client, a potential welfare loss. Using data from a randomized evaluation with dairy farmers in rural India, we test the impact of flexible microcredit repayment schedules relative to "normal" inflexible, fixed repayment schedules. Although we are only able to track those who borrow, which introduces potential selection effects, we find amongst those in flexible lending groups some evidence for higher ability to absorb shocks and higher income, which seems to be driven by limited improvements in investment and higher production from milk. On the cost-side, defaults do increase for the lender. Towards the end of the study, the microcredit market encountered crisis, with mass defaults, thus it is hard to generalize with respect to the default results. We conclude with caution, that we have shown suggestive evidence that a more flexible product design, one tailored to the needs of a dairy farmer, may be welfare enhancing for the dairy farmer. Further work is needed to both validate these results, and explore how to balance any trade-off with default. |
| Keywords: | Flexible repayment schedules; micro finance; microcredit; consumption smoothing |
| JEL: | O16 Q14 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:26608&r=mfd |
| By: | Davide Forcella; Frédéric Huybrechs |
| Abstract: | There has been growing interest lately in the role of microfinance to support environmental management of micro-enterprises and poor households. Worldwide, the number of green microfinance projects increases, yet there seems to be little discussion on how effective green microfinance is in achieving its environmental goals. This paper aims to position itself in this debate. We look at the first large-scale green microfinance programme for biodiversity conservation: Proyecto CAMBio. It consists of a combination of credits, technical assistance and conditional payments for environmentally friendly agricultural activities (PES). We focus on its implementation in Nicaragua by the microfinance institution FDL and the NGO Nitlapan. We perform an in-depth econometric analysis of a survey we conducted on a sample of 128 rural producers. We assess the clients’ characteristics that influenced the evolution of the environmental value of their farm –as defined by the indicators we used– on a span of five years, and we assess Proyecto CAMBio’s possible role in this evolution. Moreover, we further look into the effectiveness of PES in rewarding environmental betterment. Factors such as the decision to change the main economic activities, or clients’ strategies or opportunities in land accumulationappear to have the strongest influence on the evolution of the environmental value of the clients’ farm. While the project per se, even if carefully implemented in agreement with its guidelines and well performing at financial level, does not appear to have significantly influenced the evolution of the environmental value of the clients’ farm. Moreover, the PES does not seem to reward environmental improvement while instead it rewards the more credit-worthy activities, producers with more access to land and credit and in addition producers that plant fewer trees per hectare. With these results, we underline the importance of the local territorial dynamics and the complexity of the socio-environmental systems against a vision based simply on single economic actors. From our results it appears that green microfinance, without strategic articulation with local actors and broader territorial dynamics, would tend to (indirectly) support preexisting socioeconomic structures and the possibly related environmental degradation processes. We hence call for a more proactive engagement of green microfinance in the territorial dynamics and with local actors with the aim to support more sustainable livelihood trajectories and development pathways. |
| Keywords: | Microfinance; Green Microfinance; Rural Development; Payments for Environmental Services; Agricultural Finance; Ecosystem Services; Biodiversity; Central America; Proyecto CAMBio; Quantitative Analysis |
| JEL: | Q57 Q01 Q12 Q14 Q15 Q23 O13 G21 C01 |
| Date: | 2016–03–16 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:2013/228525&r=mfd |
| By: | Sandra, Kendo |
| Abstract: | Market segmentation characterized by price heterogeneity appears as a failure of classical view of market equilibrium. We suppose that an existence of specific asset pricing determines the wealth level of lenders. In microfinance, we look at the linkages between the welfare of lenders and market segmentation degree. For that, we used a maximization program where a lender utility function is defined. One of the results is that high number of lenders determines their portfolio diversification capacity. In a context of price inelasticity and price discrimination of financial demand for microfinance products, the microfinance market appears as highly segmented but not highly efficient if we consider lenders’ returns. Moreover, an increase of average yield and average amount of initial loans positively improve the utility level of lenders. So, the improvement of microfinance lenders welfare is probable, but highly constrained by the behavior of some important financial factors. |
| Keywords: | Market segmentation, microfinance, lender utility function, asset pricing and lender welfare |
| JEL: | G21 L11 L25 M20 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:70229&r=mfd |
| By: | Asongu, Simplice |
| Abstract: | Using twenty-five policy variables, we investigate determinants of mobile phone/banking in 49 Sub-Saharan African countries with data for the year 2011. The determinants are classified into six policy categories, notably: macroeconomic, business/bank, market-related, knowledge economy, external flows and human development. The empirical evidence is based on contemporary and non-contemporary Quantile regressions. The following implications are relevant to the findings. First, mobile phone penetration is positively correlated with: (i) education, domestic savings, regulation quality and patent applications, especially at low initial levels of mobile penetration; (ii) bank density; (iii) urban population density and (iv) internet penetration. Second, the use of the mobile to pay bills is positively linked with: (i) trade and internet penetration, especially in contemporary specifications and (ii) remittances and patent applications, especially at low initial levels of the dependent variable. Third, using the mobile to send/receive money is positively correlated with: internet penetration and human development, especially in the contemporary specifications. Fourth, mobile banking is positively linked with: (i) trade in contemporary specifications; (ii) remittances and patent applications at low initial levels of the dependent variable and (iii) internet penetration and human development, with contemporary threshold evidence. The policy implications are articulated with incremental policy syndromes. |
| Keywords: | Mobile phones; Mobile banking; Development; Africa |
| JEL: | G20 L96 O11 O33 O55 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:70235&r=mfd |