nep-mfd New Economics Papers
on Microfinance
Issue of 2017‒03‒26
four papers chosen by
Olivier Dagnelie
Université de Caen

  1. How to Reconcile Financial Incentives and Prosocial Motivation of Loan Officers in Microfinance? By Julie De Pril; Cécile Godfroid
  2. Microfinance and Gender: Issues, Challenges and the Road Ahead By Supriya Garikipati; Isabelle Guérin; Susan S.J. Johnson; Ariane Szafarz
  3. Recent finance advances in information technology for inclusive development: a survey By Simplice Asongu; Jacinta C. Nwachukwu
  4. Comparative human development thresholds for absolute and relative pro-poor mobile banking in developing countries By Simplice Asongu; Jacinta C. Nwachukwu

  1. By: Julie De Pril; Cécile Godfroid
    Abstract: It has been widely recognized that the microfinance sector should pursue both social and financial objectives (double bottom line objective). However, with the growing success of microfinance, numerous microfinance institutions (MFIs) experience mission drift when they focus only on their financial mission at the expense of their social one. The mainstream incentive schemes set up by MFIs for their loan officers are one of the factors contributing to mission drift for several reasons. First, monetary rewards based on financial criteria may lead unscrupulous loan officers to push clients into overindebtedness. Second, financial incentives may have a negative effect on the prosocial motivation animating numerous microfinance loan officers. In this paper, we attempt to suggest, with a mathematical model, an optimal incentive scheme double bottom line on which MFIs could rely in order to preserve loan officers’ prosocial motivation while paying attention to their financial profit.
    Keywords: microfinance; financial incentive; loan officer; financial performance; prosocial motivation
    JEL: G21 J30 M52
    Date: 2017–03–17
  2. By: Supriya Garikipati; Isabelle Guérin; Susan S.J. Johnson; Ariane Szafarz
    Abstract: This special collection examines the claim that microfinance promotes gender equality. The focus is on three areas of the debate: first, the question of how successful microfinance has been in empowering women; second, whether and how negative gender discrimination operates within the sector; third, how power relations within and beyond the household shape the context and outcomes of microfinance initiatives. The papers in this collection demonstrate the divergence of circumstances and emphasise the need to go beyond the past searches for a simple narrative regarding the impact of microfinance. Rather, as the sector evolves and is incorporated into the mainstream financial system, the challenge ahead for researchers is to marshal the evidence on gendered dynamics to ensure that the gains made are built on through deeper understanding of why impact outcomes and processes differ and use this to inform new initiatives to further gender equality.
    Keywords: microfinance; gender; women's empowerment; discrimination; household economics; power relations
    JEL: O16 J16 G21 B54 D63 I32
    Date: 2017–03–16
  3. By: Simplice Asongu (Yaoundé/Cameroun); Jacinta C. Nwachukwu (Coventry University, UK)
    Abstract: The overarching question tackled in this paper is: to what degree has financial development contributed to providing opportunities of human development for those on low-incomes and by what information technology mechanisms? We survey about 180 recently published papers to provide recent information technology advances in finance for inclusive development. Retained financial innovations are structured along three themes. They are: (i) the rural-urban divide, (ii) women empowerment and (iii) human capital in terms of skills and training. The financial instruments are articulated with case studies, innovations and investment strategies with particular emphasis, inter alia on: informal finance, microfinance, mobile banking, crowdfunding, microinsurance, Islamic finance, remittances, Payment for Environmental Services (PES) and the Diaspora Investment in Agriculture (DIA) initiative.
    Keywords: Finance; Inclusive Growth; Economic Development
    JEL: G20 I10 I20 I30 O10
    Date: 2017–01
  4. By: Simplice Asongu (Yaoundé/Cameroun); Jacinta C. Nwachukwu (Coventry University, UK)
    Abstract: We assess the correlations between mobile banking and inclusive development (poverty and inequality) in 93 developing countries for the year 2011. Mobile banking entails: ‘mobile phones used to pay bills’ and ‘mobile phones used to receive/send money’, while the modifying policy indicator is the human development index (HDI). The data is decomposed into seven sub-panels based on two fundamental characteristics, namely: regions (Latin America, Asia and Pacific, Central and Eastern Europe, and Middle East and North Africa) and income levels (upper middle income, lower middle income and low income). Our results show that at certain thresholds of the HDI, mobile banking is positively linked to inclusive development. The following specific findings are established. First, the increased use of mobile phones to pay bills is negatively correlated with: (i) poverty in lower-middle-income countries (LMIC), upper-middle-income countries (UMIC) and Latin American countries (LA), respectively at HDI thresholds of 0.725, 0.727 and 0.778 and; (ii) inequality in UMIC and LA with HDI thresholds of respectively 0.646 and 0.761. Second, the increased use of mobile phones to send/receive money is negatively correlated with: (i) poverty in LMIC, UMIC and Central and Eastern European countries (CEE) with corresponding HDI thresholds of 0.631, 0.750 and 0.750 and (ii) inequality in UMIC, CEE and LA at HDI thresholds of 0.665, 0.736 and 0.726 respectively. The findings are discussed in the light of current policy challenges in the transition from Millennium Development Goals to Sustainable Development Goals. We have exploited the only macroeconomic data on mobile banking currently available.
    Keywords: Mobile banking, quality of growth, poverty, inequality
    JEL: G20 O40 I10 I20 I32
    Date: 2017–01

This nep-mfd issue is ©2017 by 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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