nep-mfd New Economics Papers
on Microfinance
Issue of 2019‒03‒11
five papers chosen by
Aastha Pudasainee and Olivier Dagnelie

  1. Fintech and Household Resilience to Shocks: Evidence from Digital Loans in Kenya By Prashant Bharadwaj; William Jack; Tavneet Suri
  2. Verifying the internal validity of a flagship RCT: A review of Crépon, Devoto, Duflo and Pariente (American Economic Journal: Applied Economics, 2015) By Florent Bédécarrats; Isabelle Guérin; Solène Morvant-Roux; François Roubaud
  3. Lies, damned lies, and RCT : une expérience de J-PAL sur le microcrédit rural au Maroc By Florent Bédécarrats; Isabelle Guérin; Solène Morvant-Roux; François Roubaud
  4. Determinants of choice of credit sources by Eswatini SMEs: A focus on the Agriculture Sector By Dlamini, T.; Mohammed, M.
  5. The Impact of Community Based Health Insurance Schemes on Out-of-Pocket Healthcare Spending: Evidence from Rwanda By Andinet Woldemichael; Daniel Gurara; Abebe Shimeles

  1. By: Prashant Bharadwaj; William Jack; Tavneet Suri
    Abstract: Developing country lenders are taking advantage of fintech tools to create fully digital loans on mobile phones. Using administrative and survey data, we study the take up and impacts of one of the most popular digital loan products in the world, M-Shwari in Kenya. While 34% of those eligible for a loan take it, the loan does not substitute for other credit. The loans improve household resilience: households are 6.3 percentage points less likely to forego expenses due to negative shocks. We conclude that while digital loans improve financial access and resilience, they are not a panacea for greater credit market failures.
    JEL: O16 O33 O55
    Date: 2019–02
  2. By: Florent Bédécarrats (AFD Paris, France); Isabelle Guérin (IRD CESSMA); Solène Morvant-Roux (School of Social Sciences UNIGE-G3S, University of Geneva); François Roubaud (IRD, UMR DIAL, PSL, Université Paris-Dauphine)
    Abstract: We replicate a flagship randomised control trial carried out in rural Morocco that showed substantial and significant impacts of microcredit on the assets, the outputs, the expenses and the profits of self-employment activities. The original results rely primarily on trimming, which is the exclusion of observations with the highest values on some variables. However, the applied trimming procedures are inconsistent between the baseline and the endline. Using identical specifications as the original paper reveals large and significant imbalances at the baseline and, at the endline impacts on implausible outcomes, like household head gender, language or education. This calls into question the reliability of the data and the integrity of the experiment protocol. We find a series of coding, measurement and sampling errors. Correcting the identified errors lead to different results. After rectifying identified errors, we still find substantial imbalances at baseline and implausible impacts at the endline. Our re-analysis focused on the lack of internal validity of this experiment, but several of the identified issues also raise concerns about its external validity.
    Keywords: RCT, Microcredit, J-PAL, Replication, Morocco, Internal validity, Data quality
    JEL: C18 C83 C93 G21
    Date: 2018–12
  3. By: Florent Bédécarrats (AFD Paris, France); Isabelle Guérin (IRD CESSMA); Solène Morvant-Roux (School of Social Sciences UNIGE-G3S, University of Geneva); François Roubaud (IRD, UMR DIAL, PSL, Université Paris-Dauphine)
    Abstract: Comment expliquer le succès académique d’une étude randomisée dont la validité, tant interne qu’externe, est pourtant très problématique ? Prenant l’exemple d’une étude menée par le laboratoire J-PAL sur le microcrédit rural marocain, cet article mobilise les outils analytiques de la statistique, de l’économie politique et de la sociologie des sciences pour répondre à cette question. Il décrit l’ensemble de la chaîne de production de l’étude, depuis l’échantillonnage jusqu’à la publication et la dissémination des résultats, en passant par la collecte de données, la saisie et le recodage, les estimations et les interprétations. Il met en évidence une stratégie particulièrement offensive qui permet aux chercheurs de J-PAL de faire table rase du passé, y compris en s’affranchissant d’une « culture de la donnée », de refuser la critique et de contourner les règles de base de l’exercice scientifique tout au long du processus de recherche. Bien au-delà de J-PAL, nos analyses questionnent la supposée supériorité des méthodes randomisées tout en reflétant un malaise grandissant au sein du champ académique, qui parvient de moins en moins à faire respecter les règles de base de l’éthique et de la déontologie scientifique._______english_______How can we explain the academic success of a randomized study whose validity, both internal and external, is very problematic? Drawing on a study conducted on Moroccan rural microcredit by J-PAL, this article uses analytical tools from statistics, political economy and sociology of science to answer this question. It describes the entire study production chain, from sampling, data collection, data entry and recoding, estimates and interpretations to publication and dissemination of results. It highlights a particularly aggressive strategy carried out throughout the study process and in the field of research. This allows J-PAL researchers to put the past behind them, including by freeing themselves from a "data culture", rejecting criticism and bypassing the basic rules of scientific exercise throughout the research process. Well beyond J-PAL, our analyses question the supposed superiority of randomized methods while reflecting a growing unease within the academic field, which is less and less successful in enforcing the basic rules of ethics and scientific deontology.
    Keywords: Randomized Control Trial (RCT), microcrédit, Réplication, Maroc, validité interne, validité externe, sociologie des sciences, microcredit, Replication, Morocco, internal validity, internal validity, sociology of sciences.
    JEL: A11 A14 B41 C18 C93 N27 O16
    Date: 2019–02
  4. By: Dlamini, T.; Mohammed, M.
    Abstract: The purpose of this study is to identify the factors that influence choice of credit sources by SMEs in the agriculture sector. Understanding factors that determine farmers� choice of credit will help improve and prioritise financial services most frequently used by the SMEs, in order to improve local food production and contribute to the Gross Domestic Production (GDP). The study used FinScope 2016 Survey data entailing 3,024 Eswatini SMEs selected through the two stage stratified random sampling method. Out of these SMEs, 87 of them in the agriculture sector were able to access credit from the informal, semi-formal and formal service providers in 2016, hence this study focuses of them. The data was analysed using a multinomial logistic regression. The study finds that keeping financial records, capital size required to start a business, the size of business, age of the business owner, and interest rates are significant factors that influence choices of agriculture SME owners between informal, semi-formal, and formal credit providers. Entrepreneurs that do not keep records are more likely to use informal sources of credit. Therefore, there is a need to develop policies that should thrust interventions to informal sources of finance/credit such as stokvels and rotating and savings schemes (ROSCAs) and also a policy that will ensure that semi-formal financial institutions do not morph into pseudo formal institutions, that is, commercial banks.
    Keywords: Agriculture; access to finance; SMMEs; SMEs; credit choices; Eswatini JEL codes: Q140, Q180, R200; Agricultural Finance
    Date: 2018–09–25
  5. By: Andinet Woldemichael; Daniel Gurara; Abebe Shimeles
    Abstract: Achieving universal health coverage, including financial risk protection and access to quality essential health-care services, is one of the main Sustainable Development Goals. In low-income countries, innovative and affordable health financing systems are key to realize these goals. This paper assesses the impacts of Community-Based Health Insurance Scheme in Rwanda on health-related financial risks using a nationally representative household survey data collected over a ten-year period. We find that the scheme significantly reduce annual per capita out-of-pocket spending by about 3,600 Rwandan Franc (about US$12) or about 83 percent of average per capita healthcare expenditure compared to the baseline level in 2000.The impacts however favor the rich as compared to the poor. The program also reduces the incidence of catastrophic healthcare spending significantly.
    Date: 2019–02–22

This nep-mfd issue is ©2019 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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