nep-mfd New Economics Papers
on Microfinance
Issue of 2018‒08‒20
six papers chosen by
Olivier Dagnelie
Université de Caen

  1. The determinants of interest rates in microfinance: age, scale and organisational charter By Nwachukwu, Jacinta; Aziz, Aqsa; Tony-Okeke, Uchenna; Asongu, Simplice
  2. Determinants of the Performance of Microfinance Institutions: A Systematic Review By Hermes, Cornelis; Hudon, M.
  3. Microfinancing in Developing Countries: An Assessment Taking Particular Account of the Views of Becker and Posner By Tisdell, Clem; Ahmad, Shabbir
  4. Loans, Wealth Creation and the Socioeconomic Situation of Women in the Taluka Area of the Khairpur District, Sindh, Pakistan: A Study Based on Interviews with Female Focal Groups By Tisdell, Clem; Ahmad, Shabbir; Nadia, Agha; Steen, John; Verreynne, Martie-Louise
  5. Consumption smoothing in the working-class households of interwar Japan By Kota Ogasawara
  6. Strumenti per il sostegno finanziario di famiglie e microimprese: il caso italiano (Policies to help financially vulnerable Italian households and micro-businesses) By Simonetta Cotterli

  1. By: Nwachukwu, Jacinta; Aziz, Aqsa; Tony-Okeke, Uchenna; Asongu, Simplice
    Abstract: This study compares the responsiveness of microcredit interest rates to age, scale of lending and organisational charter. It uses an unbalanced panel of 300 MFIs from 107 developing countries from 2005 to 2015. Three key trends emerge from the results of a 2SLS regression. First, the adoption of formal microbanking practices raises interest rates compared with other forms of microlending. Second, large scale lending lowers interest rates only for those MFIs that already hold legal banking status. Third, age of operation in excess of eight years exerts a negative impact on interest rates, regardless of scale and charter type of MFI. Collectively, our results indicate that policies which incentivise mature MFIs to share their knowledge will be more effective in helping the nascent institutions to overcome their cost disadvantages compared with reforms to transform them into licensed banks. For MFIs which already hold permits to operate as banks, initiatives to increase loan sizes are key strategic pricing decisions, irrespective of the institution’s age. This study is original in its differentiation of the impact on interest rates of regulations which promote formal banking principles, credit market extension vis-à-vis knowledge sharing between mature and nascent MFIs.
    Keywords: : Microfinance, microbanks, non-bank financial institutions, interest rates, age, economies of scale, developing countries
    JEL: E43 G21 G23 G28 N20
    Date: 2018–01
  2. By: Hermes, Cornelis; Hudon, M. (Groningen University)
    Date: 2018
  3. By: Tisdell, Clem; Ahmad, Shabbir
    Abstract: This paper assesses the views expressed by Gary Becker and Richard Posner about the economic value of relying on microfinancing for economic development as well as their opinions about its desirability as a means of alleviating poverty. It also raises some issues overlooked by Becker and Posner. Where relevant, the discussion is related to results obtained from a case study of microfinancing in the Sindh District of Pakistan. Subjects covered include the economic efficiency of the supply of microfinance, the optimality of microfinancing versus philanthropy, whether high interest rates and short-term loans for microfinance are justified, preference for females rather than males in microfinancing, social networking and the efficient provision and allocation of microfinance, and the prospects for escaping from poverty as a result of microfinancing.
    Keywords: Agricultural and Food Policy, Agricultural Finance, International Development
    Date: 2017–09–21
  4. By: Tisdell, Clem; Ahmad, Shabbir; Nadia, Agha; Steen, John; Verreynne, Martie-Louise
    Abstract: This paper relies on information obtained from focal group discussions with 26 women involved in farming in four villages in the Sindh province of Pakistan. The sample was drawn from poor households possessing little or virtually no land. Focus group data were collected by using a semi-structured questionnaire. The main purpose of this paper is to identify factors that favour or impede these women taking of agricultural loans for development. The findings indicate that only women in one village had taken loans for the purpose of advancing agriculture. Distinct from other villages, the women in this village had developed strong social networks and were politically quite active. In the village Gagri, the presence of social capital played a major role in agricultural development and alleviated the poverty of their households. In the other villages, the poverty of the households of females participating in the focal focus group discussions remained entrenched. These women seemingly followed a pathway to poverty alleviation and agricultural wealth creation that could be followed by women from other villages. However, this would be a hasty conclusion because women from the other three villages face serious impediments to the creation of social capital, which are identified in this paper. An additional contribution of this paper is to identify the nature of agricultural loans and conditions, which restricted the ability and willingness of the women to take loans for agricultural development. This enables us to provide a grassroots assessment of their current situation as far as finance for women in agriculture is concerned. The results also enable us to suggest a new hypothesis (relevant to the Indian subcontinent) about the relationship between the likelihood of women from agricultural households forming social networks to promote agricultural development in order to reduce the poverty-level of their households. Moreover, the literature frequently expresses doubts about the view that male ownership of land is the major impediment to women obtaining loans for agricultural purposes. All land owned by households in this survey is owned by males. Furthermore, attention is brought to some of the difficult problems involved in measuring social capital and its components. These are often overlooked in the literature.
    Keywords: Agricultural and Food Policy, Agricultural Finance, Food Security and Poverty, International Development
    Date: 2017–07–27
  5. By: Kota Ogasawara
    Abstract: I analyze Osaka factory worker households in the early 1920s, whether idiosyncratic income shocks were shared efficiently, and which consumption categories were robust to shocks. While the null hypothesis of full risk-sharing of total expenditures was rejected, factory workers maintained their households, in that they paid for essential expenditures (rent, utilities, and commutation) during economic hardship. Additionally, children's education expenditures were possibly robust to idiosyncratic income shocks. The results suggest that temporary income is statistically significantly increased if disposable income drops due to idiosyncratic shocks. Historical documents suggest microfinancial lending and saving institutions helped mitigate risk-based vulnerabilities.
    Date: 2018–07
  6. By: Simonetta Cotterli
    Abstract: This study aims to review and evaluate several policies enacted in the financial field to alleviate the negative consequences of the economic crisis on families and micro-businesses. Two different, yet complementary aspects of the effects of the crisis have been examined: the increased difficulty in gaining access to credit and the increased problems in meeting debt repayment obligations. Firstly the recent regulations governing micro-credit - enacted to facilitate access to credit for families and micro-businesses (the latter in light of the increasing need for self-sufficient entrepreneurial projects, as a response to increased unemployment in the job market) - are evaluated. This is followed by an examination of the efficacy of the law relating to over-indebtedness of families and micro-businesses, with particular focus on the concept of creditor-blame. This study ends with a question: could an interpretation of the new rules governing responsible credit to consumers constitute a legal right to such credit?Classification-JEL: G21, G28, I38, K35, K36
    Keywords: microcredit, overindebtness, creditor blame, responsible credit
    Date: 2016–12

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