nep-mfd New Economics Papers
on Microfinance
Issue of 2017‒03‒12
two papers chosen by
Olivier Dagnelie
Université de Caen

  1. The Equity Impacts of Targeted Smallholder Agricultural Credit By Pushkar Maitra; Sandip Mitra; Dilip Mookherjee; Sujata Visaria
  2. A Firm of One's Own: Experimental Evidence on Credit Constraints and Occupational Choice By Brudevold-Newman, Andrew; Honorati, Maddalena; Jakiela, Pamela; Ozier, Owen

  1. By: Pushkar Maitra; Sandip Mitra (Sampling and Official Statistics Unit, Indian Statistical Institute); Dilip Mookherjee; Sujata Visaria (HKUST Institute for Emerging Market Studies (IEMS); Department of Economics, Hong Kong University of Science and Technology)
    Abstract: We examine the distributive impacts of two alternative approaches to deliver agricultural credit to smallholders: TRAIL (or trader-agent intermediated lending), where local traders recommend village residents for individual liability micro-leans, and GBL (or group-based lending), where households self-select into groups and receive joint liability loans. We use data from a field experiment in eastern India to estimate how the effects of these schemes differ by economic (proxied by landownership) and social (proxied by caste and religion) status of households. Our method accounts for endogenous selection frequencies in each group and the treatment effects on farm income conditional on selection, to estimate the impacts of each scheme on Atkinson-based measures of welfare and inequality. We find that TRAIL loans increased farm incomes for all land groups, but particularly for landless households. As a result, across land groups, the TRAIL scheme generated significantly greater welfare than the GBL scheme, irrespective of inequality aversion. The GBL scheme generated larger effects among the socially disadvantaged minority groups. This suggests that the efficiency and equity implications of the two schemes might be different depending on how we partition households.
    Keywords: agricultural finance, agent based lending, group lending, distributive impacts
    Date: 2017–03
  2. By: Brudevold-Newman, Andrew (University of Maryland); Honorati, Maddalena (World Bank); Jakiela, Pamela (University of Maryland); Ozier, Owen (World Bank)
    Abstract: We conducted a randomized evaluation of two labor market interventions targeted to young women aged 18 to 19 in three of Nairobi's poorest neighborhoods. One treatment offered participants a bundled intervention designed to simultaneously relieve credit and human capital constraints; a second treatment provided women with an unrestricted cash grant, but no training or other support. Both interventions had economically large and statistically significant impacts on income over the medium-term (7 to 10 months after the end of the interventions), but these impacts dissipated in the second year after treatment. Our results are consistent with a model in which savings constraints prevent women from smoothing consumption after receiving large transfers – even in the absence of credit constraints, and when participants have no intention of remaining in entrepreneurship. We also show that participants hold remarkably accurate beliefs about the impacts of the treatments on occupational choice.
    Keywords: youth unemployment, microenterprises, entrepreneurship, credit constraints, cash grants, training, Africa, gender
    JEL: J24 M53 O12
    Date: 2017–02

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