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on Microfinance |
| By: | Attanasio, O.; Augsburg, B.; de Haas, Ralph (Tilburg University, Center For Economic Research) |
| Abstract: | We study theoretically and empirically the demand for microcredit under different liability arrangements and risk environments. A simple theoretical model shows that the demand for joint-liability loans can exceed that for individual-liability loans when risk-averse borrowers value their long-term relationship with the lender. Joint liability then offers a way to diversify risk and to reduce the chance of losing access to future loans. We also show that the demand for loans depends negatively on the riskiness of projects. Using data from a randomized controlled trial in Mongolia we find that these model predictions hold true empirically. In particular, we use innovative data on subjective risk perceptions to show that expected project risk negatively affects the demand for loans. In line with an insurance role of joint-liability contracts, this effect is muted in villages where joint-liability loans are available. |
| Keywords: | microcredit; joint liability; loan take-up; risk diversification |
| JEL: | D14 D81 D86 G21 O16 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiucen:6bd782c0-e7fb-48df-91d1-12160b039601&r=mfd |
| By: | Bryan McCannon (West Virginia University, Department of Economics); Zachary Rodriguez (Saint Bonaventure University, School of Business) |
| Abstract: | We ask whether access to microfinance loans by the poor has a spillover effect on their pro†social behaviors. An experimental field study in southern, rural Uganda is conducted using free riding in public goods contributions as an assessment. We document higher levels of contributions by those who have previously received a microloan. This effect cannot be explained by changes in social norms, income effects, or sample selection bias. The results suggest that exposure to microfinance promotes social preferences. |
| Keywords: | experiment, field study, free riding, microfinance, public goods, social norm, social preference, Uganda |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:wvu:wpaper:16-13&r=mfd |
| By: | Ramesh Prasad Chaulagain (Nepal Rastra Bank) |
| Abstract: | Recent policies and practices of Nepali financial sector are focused to establish financial institutions to increase people’s ‘access to finance’. As a result, the numbers of financial institutions licensed both by Nepal Rastra Bank and Government of Nepal are growing rapidly. All the institutions are doing the similar functions in the same market. The financial institutions licensed by Nepal Rastra Bank are classified into commercial banks, development banks, finance companies and micro finance development banks, whereas the Government of Nepal licenses to the saving and credit cooperative socieites (SACCOS). Despite the supply sided endeavors, the demand side considerations in financial sector is more silent. This creates a concern about the capability of people in consuming financial services. As a result, quality and sustainable access to finance are in question. Furthermore, the expansions of such institutions are also concentrated in urban, semi-urban and priviledged areas causing unequal distribution of institutions and limited access to finance. This situation has given rise to unhealthy competition among the actors focusing on earning rather than empowering the financial consumers. This paper explores how far the expansion of Banks and Financial Institutions including cooperatives assures the access to finance and its sustainability. The secondary data shows a significant growth of financial sector and an increment of number of people involved in financial transactions in the banking industry. However, the primary data of the study shows that such expansion is necessary but not sufficient condition to assure a sustainable access to finance. The study also explores the worth of financial literacy among the people both in urban and rural areas as one of the means to enhance people’s access to finance and its sustainability. The paper is based more on the discussion and analytical approach with a mix of secondary and primary sources of data. |
| Keywords: | Financial literacy, Financial sustainability, Access to finance |
| JEL: | G21 G29 |
| Date: | 2015–09 |
| URL: | http://d.repec.org/n?u=RePEc:nrb:wpaper:nrbwp201531&r=mfd |