nep-mfd New Economics Papers
on Microfinance
Issue of 2016‒04‒09
three papers chosen by
Aastha Pudasainee and Olivier Dagnelie

  1. What Are the Headwaters of Formal Savings? Experimental Evidence from Sri Lanka By Callen, Michael; Mel, Suresh de; McIntosh, Craig; Woodruff, Christopher
  2. Microfinance institutional growth: How driven forces impact their financial integration? By Sandra, Kendo; Chicot, Eboue
  3. Uptake of Health Insurance and the Productive Safety Net Program in Rural Ethiopia By Shigute, Zemzem; Mebratie, Anagaw Derseh; Sparrow, Robert; Yilma, Zelalem; Alemu, Getnet; Bedi, Arjun S.

  1. By: Callen, Michael (Harvard Kennedy School); Mel, Suresh de (University of Peradeniya); McIntosh, Craig (University of California,); Woodruff, Christopher (University of Warwick)
    Abstract: When households increase their deposits in formal bank savings accounts, what is the source of the money? We combine high-frequency surveys with an experiment in which a Sri Lankan bank used mobile Point-of-Service (POS) terminals to collect deposits directly from households each week. We find that the headwaters of formal savings are in sacrificed leisure time: households work more, with evidence that improved savings options generate an increase in labor effort in both selfemployment and the wage market. The results are consistent with a standard neo-classical model of the effect of real interest rate changes on intertemporal labor allocation, and suggest that the labor allocation channel is an important mechanism linking savings opportunities to income.
    Keywords: savings, household decisionmaking, high-frequency surveys. JEL Classification: O16, D14, G21
    Date: 2016
  2. By: Sandra, Kendo; Chicot, Eboue
    Abstract: This article analyses the growth of microfinance by examining how some driven forces heighten more or less their financial integration. Three main driven forces identify: agency costs, financial development and trade-off in microfinance. The author samples 542 microfinance institutions. Quantile regression applies to analyze difference effects. The results first reveal that high financial development can easily improve financial integration of microfinance, by expanding rate of external investors. Nevertheless, as viewed, high financial integration can also reach where financial development is low. Then, there is inverse link between agency costs and financial integration of MFIs. At last outreach performs better than financial performance in improving their financial integration. There is no mission drift across quantiles and status. Microfinance institutions that plan to increase their average loans with an increase of their number of active borrowers perform better in a financial integration.
    Keywords: Financial integration, microfinance, financial development, agency costs, financial performance and outreach
    JEL: G21 G32 O57
    Date: 2016–03–01
  3. By: Shigute, Zemzem (ISS, Erasmus University Rotterdam); Mebratie, Anagaw Derseh (ISS, Erasmus University Rotterdam); Sparrow, Robert (Wageningen University); Yilma, Zelalem (ISS, Erasmus University Rotterdam); Alemu, Getnet (University of Addis Ababa, Ethiopia); Bedi, Arjun S. (ISS, Erasmus University Rotterdam)
    Abstract: Due to lack of well-developed insurance, credit and labor markets, rural families in Ethiopia are exposed to a range of covariate and idiosyncratic risks. In 2005, to deal with the consequences of covariate risks, the government implemented the Productive Safety Net Program (PSNP) - an active labor market program to build rural assets, and in 2011, to mitigate the financial consequences of ill-health, the government introduced a pilot Community Based Health Insurance (CBHI) Scheme. This paper explores whether scheme uptake and retention is affected by access to the PSNP. Based on several rounds of household level panel data and qualitative information, the analysis shows that participating in the PSNP increases the probability of CBHI uptake by 24 percentage points and enhances scheme retention by 10 percentage points. Analysis of the channels through which the PSNP influences CBHI uptake indicates that the bulk of the effect may be attributed to explicit and implicit pressure applied by government officials on PSNP beneficiaries. Whether this is a desirable approach is debatable. Nevertheless, the results suggest that membership in existing social protection programs may be leveraged to spread new schemes and potentially accelerate poverty reduction efforts.
    Keywords: productive safety net program, active labor market program, Ethiopia, community based health insurance, uptake of health insurance
    JEL: J65 J48 I13
    Date: 2016–03

This nep-mfd issue is ©2016 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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