nep-mfd New Economics Papers
on Microfinance
Issue of 2019‒04‒22
four papers chosen by
Olivier Dagnelie
Université de Caen

  1. Understanding the average impact of microcredit expansions: a Bayesian hierarchical analysis of seven randomized experiments By Meager, Rachael
  2. Entrepreneurial Motivation and Business Performance: Evidence from a French Microfinance Institution By Renaud Bourlès; Anastasia Cozarenco
  3. Does microfinance have an impact on borrower's consumption patterns and women's empowerment? By Feldhoff, Charlotte H.; Liu, Yi; Feldhoff, Patricia R.
  4. Losers distribution, with applications to financial inclusion: Lightning can strike twice, but it may not strike at all By John H. Y. Edwards

  1. By: Meager, Rachael
    Abstract: Despite evidence from multiple randomized evaluations of micro- credit, questions about external validity have impeded consensus on the results. I jointly estimate the average effect and the heterogeneity in effects across seven studies using Bayesian hierarchical models. I find the impact on household business and consumption variables is unlikely to be transformative and may be negligible. I find reasonable external validity: true heterogeneity in effects is moderate, and approximately 60 percent of observed heterogeneity is sampling variation. Households with previous business experience have larger but more heterogeneous effects. Economic features of microcredit interventions predict variation in effects better than studies’ evaluation protocols.
    JEL: D14 G21 I38 O12 O16 P34 P36
    Date: 2019–01–01
  2. By: Renaud Bourlès (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - EHESS - École des hautes études en sciences sociales, AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Anastasia Cozarenco (CERMi - Centre for European Research in Microfinance, MRM - Montpellier Research in Management - UM1 - Université Montpellier 1 - UM3 - Université Paul-Valéry - Montpellier 3 - UM2 - Université Montpellier 2 - Sciences et Techniques - UPVD - Université de Perpignan Via Domitia - Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School - UM - Université de Montpellier)
    Abstract: This article examines the link between entrepreneurial motivation and business performance in the French microfinance context. Using hand-collected data on business microcredits from a Microfinance Institution (MFI), we provide an indirect measure of entrepreneurial success through loan repayment performance. Controlling for the endogeneity of entrepreneurial motivation in a bivariate probit model, we find that "necessity entrepreneurs" are more likely to have difficulty repaying their microcredits than "opportunity entrepreneurs". However, type of motivation does not appear to make a difference to business survival. We build a stylized model to develop formal arguments supporting this outcome. We test for the robustness of our results using parametric duration models, and show that necessity entrepreneurs experience difficulties in loan repayment earlier than their opportunity counterparts, corroborating our initial findings.
    Keywords: opportunity and necessity entrepreneurs,business microcredit,loan repayment,business survival
    Date: 2018–12
  3. By: Feldhoff, Charlotte H.; Liu, Yi; Feldhoff, Patricia R.
    Abstract: This paper conducts a thorough data analysis using cross-sectional data from a study carried out in Mexico including over 16,500 observations. In the study, clusters were selected in areas Compartamos Banco, a Microfinance institution (MFI), has not lent in before. The clusters were randomly assigned to either the treatment or the control group. The analysis suggests that Microfinance has a significant positive effect on school and food expenditure but no apparent effect on entrepreneurship. Using regression analysis, a significant positive effect on women's empowerment and its positive effect on total consumption is found.
    Keywords: microfinance,consumption patterns,women's empowerment,Mexico
    JEL: D14 G21 I15 I25 I31 J16 O12
    Date: 2019
  4. By: John H. Y. Edwards (Tulane University)
    Abstract: This paper develops the "Losers distribution" a new discrete probability distribution that describes the number of losers in a k-player game with n-fold identical trials. The problem of financial inclusion demonstrates its application. Fair subsidized lotteries are proposed as a complement to microfinance for providing financing to the poor.
    Keywords: Financial Exclusion, Inequality, Financial Market Failure, Income Distribution, Poverty, Lotteries
    JEL: O1 C1 G1 H4
    Date: 2019–04

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