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on Microfinance |
| By: | Faress Bhuiyan, Muhammad (Carleton College); Ivlevs, Artjoms (University of the West of England, Bristol) |
| Abstract: | Microcredit has long been hailed as a powerful tool to promote livelihoods and reduce poverty through entrepreneurship. However, its impacts on people's subjective well-being remain underexplored. We present a unified theoretical framework for analyzing the effect of microcredit-enabled entrepreneurship on overall life satisfaction – a key manifestation of subjective well-being. Empirically, we apply an instrumental variable approach to a unique census-like household survey conducted in three villages of Bangladesh in 2013. In spite of having no direct effects, we find that microcredit borrowing has an indirect negative effect on overall life satisfaction, through increased worry. On a positive note, we find that female micro-borrowers experience an increase in satisfaction with financial security and achievement in life. We also provide evidence that micro-borrowers with higher levels of assets experience an increase in satisfaction with financial security. |
| Keywords: | microcredit, entrepreneurship, life satisfaction, happiness, depression, worry, female empowerment, Bangladesh |
| JEL: | I31 J16 L26 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11819&r=mfd |
| By: | M.A. Boermans; Daan Willebrands |
| Abstract: | This paper examines the effect of financial constraints on firm performance using a sample of small business owners who are client at a microfinance institution (MFI). In developing countries, a lack of access to finance is seen as a key obstacle to successful entrepreneurship and economic growth. However, empirical evidence on this is still fragmented and sparse. This study contributes to the literature by applying an alternative measure of financial constraints based on actual lending and borrowing behavior to test how borrowing affects firm productivity. We use survey data of 615 entrepreneurs from Tanzania to analyze the relationship between financial constraints and labour productivity. Using OLS regression and propensity score matching techniques the results show that financial constraints impede labour productivity and are important barriers to successful entrepreneurship. Further tests suggest that financial constraints matter regardless of the measurement method used, thereby comforting researchers in a fragmented field which applies a wide range of financial constraints variables. |
| Keywords: | Entrepreneurship, credit constraints, access to finance, firmperformance |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:use:tkiwps:1802&r=mfd |