nep-mfd New Economics Papers
on Microfinance
Issue of 2018‒10‒15
six papers chosen by
Aastha Pudasainee and Olivier Dagnelie

  1. Impact of microfinance on poverty and household income in Rural Areas in Nigeria By Jolaoso, Enoch; Asirvatham, Jebaraj
  2. Insurance Contracts when Individuals “Greatly Value” Certainty: Results from a Field Experiment in Burkina Faso By Elena Serfilippi; Michael Carter; Catherine Guirkinger
  3. The impact of financial inclusion on rural food security experience: a perspective from low-and middle-income countries By Baborska, Renata; Hernandez-Hernandez, Emilio; Magrini, Emiliano; Morales-Opazo, Cristian
  4. Liquid milk: Cash Constraints and Recurring Savings among Dairy Farmers in Kenya By Geng, Xin; Janssens, Wendy; Kramer, Berber
  5. The dynamics of finance-growth-inequality nexus: Theory and evidence for India By Pranab Kumar Das; Bhaswati Ganguli; Sugata Marjit; Sugata Sen Roy
  6. Could mobile money applications improve farm productivity? Insights from rural Mozambique By Yao, Becatien H.; Shanoyan, Aleksan

  1. By: Jolaoso, Enoch; Asirvatham, Jebaraj
    Keywords: Financial Economics, International Development
    Date: 2018–01–17
  2. By: Elena Serfilippi; Michael Carter; Catherine Guirkinger
    Abstract: In discussing the paradoxical violation of expected utility theory that now bears his name, Maurice Allais noted that individuals tend to “greatly value” payoffs that are certain. Allais' observation would seem to imply that people will undervalue insurance relative to the predictions of expected utility theory because as conventionally constructed, insurance offers an uncertain benefit in exchange for a certain cost that certainty-loving individuals will overvalue. Pursuing this logic, we implemented insurance games with cotton farmers in Burkina Faso. On average, farmer willingness to pay for insurance increases significantly when a premium rebate framing is used to render both costs and benefits of insurance uncertain. We show that the impact of the rebate frame on the willingness to pay for insurance is driven by those farmers who exhibit a well-defined discontinuous preference for certainty, a concept that we adapt from the u-v model of utility and measure with a novel behavioral experiment. Given that the potential impacts of insurance for small scale farmers are high, and yet demand for conventionally framed contracts is often low, the insights from this paper suggest welfare-enhancing ways of designing insurance for low-income farmers.
    JEL: D03 Q12
    Date: 2018–09
  3. By: Baborska, Renata; Hernandez-Hernandez, Emilio; Magrini, Emiliano; Morales-Opazo, Cristian
    Abstract: The paper analyses the impact of using single, combinations and the range of three different formal financial services – savings, credit and payments – on the personal food security experience in rural areas across 88 low-and middle-income countries. It takes advantage of Global Findex database and Food Insecurity Experience Scale (FIES) – both included in the 2014-round of Gallup World Poll that collects data at individual-level and comparable worldwide. Our outcome variable of interest is the individual’s probability of experiencing food insecurity related to difficulties in access to food and which we measure through FIES. Econometrically, we employ different matching techniques: entropy balancing, matching on propensity scores and fully interacting linear matching in order to assess the consistency of estimated impacts. The results indicate mixed food security effects depending on the type of service used. Use of savings accounts significantly decreases, use of credit significantly increases and use of formal payment services has no effect on the individual’s probability of experiencing food insecurity. Our findings are consistent with the view that the specific features rather than the range of services offered by formal financial sector is determinative in the final food security experience, especially when they can be assigned to positive income effects.
    Keywords: Financial inclusion, experience-based food insecurity scale, rural populations, low-and middle-income countries, impact, entropy balancing
    JEL: O12 Q18
    Date: 2018
  4. By: Geng, Xin; Janssens, Wendy; Kramer, Berber
    Keywords: Food and Agricultural Marketing, Ag Finance and Farm Management, Research Methods/Econometrics/Stats
    Date: 2018–06–20
  5. By: Pranab Kumar Das; Bhaswati Ganguli; Sugata Marjit; Sugata Sen Roy
    Abstract: The paper critically inquires the ‘finance-growth-inequality’ nexus based on an econometric analysis of the IHDS Survey data for two rounds – 2005-06 and 2011-12. The study attempts to assess the co-evolution of finance-growth-inequality in an intertemporal framework. At the household level asset is still the most important determinant of bank loans inspite of several policy measures aimed at financial inclusion. However, the probability of receiving a bank loan increases if any member of the household is active participant of the local level government or caste association. The most important finding of the paper pertains to the econometric result that the household asset grows at the same rate independent of the source of loans - banks or informal moneylenders though the level effect (intercept) is higher if the loan is obtained from banks or lower if the household lives below poverty line. The same observation is also confirmed for per capita income of the households. The phenomenon is explained in a theoretical model of intertemporal choice of entrepreneur-investor to show that if there are both formal and informal sources of borrowing with a constraint on the formal sector borrowing and no constraint on the latter, then growth rates of asset and income are determined by the informal sector interest rate. This result can be generalised for any number of sources of borrowing. This questions the conventional wisdom regarding the policy aimed at financial inclusion. Inequality of income increases independent of the source of borrowing, though the households living below poverty line are worse off in general. If the major source of borrowing is bank for the business and industry then inequality increases more for the above poverty line households than if the major source is moneylenders or the households belong to the below poverty line category. Moneylenders as the source of borrowing is not as regressive as is believed. So the whole issue of financial inclusion needs a review in the light of the findings of the paper.
    Keywords: Financial development, Financial Inclusion Growth, Inequality, Bank, India, IHDS, Logit Model
    Date: 2018
  6. By: Yao, Becatien H.; Shanoyan, Aleksan
    Keywords: International Development, Ag Finance and Farm Management, Productivity Analysis and Emerging Technologies
    Date: 2018–06–20

This nep-mfd issue is ©2018 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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