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on Microfinance |
| By: | Kristina Czura; Stefan Klonner |
| Abstract: | Conventional wisdom in economics holds that traditional credit and insurance networks are inapt for insuring against covariate risks such as natural hazards. We challenge this claim by examining changes in financial allocations in Rotating Savings and Credit Associations (Roscas), a popular group-based financial institution world-wide, in the aftermath of the 2004 Indian Ocean tsunami. With financial data from locations along the South Indian coast that were affected by this natural disaster to different extents, we estimate the causal effect of this devastating economic shock on financial flows between occupational groups, the price of credit and other loan characteristics. We find that the supply of funds in these local credit networks remained remarkably stable, while demand by self-employed members increased significantly. In response, substantial funds were channeled from wage-employed members and commercial investors to small and medium-scale entrepreneurs. We conclude that traditional non-market financial institutions may be more important for coping with covariate risks in low-income environments than commonly assumed. |
| Keywords: | risk-sharing, credit, informal insurance, Roscas, financial institutions, natural disasters |
| JEL: | O16 Q54 G23 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7354&r=mfd |
| By: | Ding, Z. |
| Abstract: | It is widely accepted that rural microcredit has the potential to contribute to poverty reduction in developing countries. This paper examines the factors that affect rural residents decisions to participate in different types of microcredit, and how these factors impact on household income and consumption, using cross-sectional data from a survey in China. A multinomial endogenous switching regression model is employed to account for selection bias and treatment effects. The empirical findings indicate that family size, dependency ratio, local casual wage rate, credit information and shocks mainly determine the selection of different credit sources. Furthermore, the estimates reveal that participation in microcredit tends to increase both per capita income and consumption significantly. Acknowledgement : |
| Keywords: | Food Security and Poverty |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:276953&r=mfd |
| By: | Turvey, C. G. |
| Abstract: | This paper provides an overview of concepts, issues and research on the relationship between financial inclusion and inclusive rural transformation. When considering how the growth of demand for financial services is related to the broader processes of structural and rural transformation, the evidence shows that agricultural credit provides positive returns, but still with small farm and gender biases. Liberalization of financial markets may not have had the desired spillover effects into rural credit, so there may be justification for public intervention. Effective microcredit programmes might also need to be coupled with outreach and technical assistance in order to achieve desired goals and objectives. In addressing how innovations in rural finance contribute to making access to financial services and rural transformation more inclusive, the report focuses on demand relationships. Farmers who use credit have moderately inelastic to elastic demands. Policies that curb interest rates or otherwise lower the cost of credit may encourage credit demand. Research on risk rationing suggests a behavioural aspect to credit that needs to be considered. Policies that fail to consider collateral and risk may fail if risk-rationed farmers will either not borrow at all, or borrow less than optimal amounts of credit. Policies targeting inclusive finance for inclusive transformation should be targeted towards specific problems. If subsidies are required, they must be smart – in the sense of minimizing market distortions – and are best targeted towards lenders as incentives to increase loans in poverty or underserved communities, women borrowers and indigenous peoples. When markets fail, agriculture governments should consider state-run government-sponsored enterprises. Finally, agricultural lenders, including microfinance institutions, must reconsider their approach to disciplined savings and lending activities. Many farmers with credit demand will not borrow because the payment terms do not consider the risk or match the liquidity cycle of planting and harvesting. |
| Keywords: | Agricultural Finance |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ags:unadrs:280048&r=mfd |
| By: | El Harizi, K.; Yan, X. |
| Abstract: | Graduation out of chronic poverty has recently been receiving considerable attention by the global development community for its potential synergies with social protection, microfinance and livelihoods development approaches to poverty reduction. This paper examines the evidence regarding the effectiveness of graduation strategies in reducing extreme poverty, with a focus on rural households, and proposes a new analytical framework to support future work on graduation as a learning and adaptation process in development practice. |
| Keywords: | Agricultural Finance |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ags:unadrs:280051&r=mfd |
| By: | Valentina Rotondi; Francesco Billari |
| Abstract: | This paper investigates the effect of using mobile money technology on children's school participation in low-income societies. We argue that, by reducing transaction costs, and by making it easier and less expensive to receive remittances, mobile money technology reduces the need for coping strategies that are detrimental to child development, such as withdrawing children from school and sending them to work. We test this hypothesis using a set of comparative samples from seven low-income countries. We find that mobile money technology increases the chances of children attending school. This finding is robust to the use of estimation techniques that deal with possible endogeneity issues. We also show that the effect of mobile money is mainly driven by African countries and that, at least for girls, it is significantly higher when the household is living below the poverty line. |
| Keywords: | Mobile money, School, Child Labor, Technology, Digital Revolution |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:don:donwpa:109&r=mfd |