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on Microfinance |
| By: | Gulesci, Selim |
| Abstract: | A widely-held view is that small firms in developing countries are prevented from making profitable investments by lack of access to credit and insurance markets. One solution is to provide repayment flexibility in credit contracts. Repayment flexibility eases both the credit constraint, as it allows for increased spending during the startup phase, and offers insurance, in case of fluctuations in income. In a field experiment among microcredit borrowers in Bangladesh, we randomly assign the option to delay up to 2 monthly repayments at any point during a 12-month loan cycle. The flexible contract leads to substantial (0.2 standard deviation) improvements in business outcomes and socio-economic status, combined with lower default rates. The results are driven by an increase in entrepreneurial risk taking, implying that the primary mechanism is insurance provision. Repayment flexibility also attracts less risk-averse borrowers. Our findings suggest that lack of insurance is an important constraint for small firms but that a simple financial product that increases repayment flexibility can be an effective tool for enabling enterprise growth. |
| Keywords: | credit; entrepreneurship; Insurance; Microfinance; Repayment flexibility |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13329&r=mfd |
| By: | Jacinta C. Nwachukwu (Coventry University, UK); Aqsa Aziz (Coventry University, UK); Uchenna Tony-Okeke (Coventry University, UK); Simplice A. Asongu (Yaoundé, Cameroon) |
| 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-Ã -vis knowledge sharing between mature and nascent MFIs. |
| Keywords: | Microfinance, microbanks, non-bank financial institutions |
| JEL: | G21 G23 G28 E43 N20 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:afe:wpaper:18/005&r=mfd |
| By: | Simplice A. Asongu (Yaoundé/Cameroon); Jacinta C. Nwachukwu (Preston, United Kingdom) |
| 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 systematically review 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: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:afe:wpaper:18/034&r=mfd |
| By: | Patrick-Hervé Mbouombouo Mfossa (CCAM - Centre Congolais Allemand de Microfinance - Université protestante au Congo) |
| Abstract: | The conquest and retention of customers are at the heart of the strategic choices made by the three major companies competing for the Cameroonian mobile money market. Beyond extensive national marketing campaigns, this battle also goes on through SMS whose explicit and latent contents may sometimes refer to different realities likely to push customers towards competition. The purpose of this paper is to test this hypothesis from a content analysis of the SMS from Orange Cameroon to its clients on 31/07/2017, in with reference to the rates for its mobile money services (Orange Money). |
| Abstract: | La conquête et fidélisation des clients sont au coeur des choix stratégiques des trois entreprises qui se disputent le marché camerounais du mobile money. Au-delà des vastes campagnes marketing à l'échelle nationale, cette bataille passe par des SMS dont le contenu manifeste et les contenus latents peuvent parfois renvoyer à des réalités divergentes susceptibles de pousser le client vers la concurrence. L'objectif de cet article est de vérifier cette hypothèse à partir d'une analyse de contenu du SMS d'Orange Cameroun du 31/07/2017 en rapport avec les tarifs de son service de mobile money (Orange Money). |
| Keywords: | Mobile money,Consumer protection,Pricing plan,Content analysis,Analyse de contenu,Plan tarifaire,Protection des consommateurs |
| Date: | 2017–08–25 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01903067&r=mfd |