nep-mfd New Economics Papers
on Microfinance
Issue of 2019‒05‒06
three papers chosen by
Aastha Pudasainee and Olivier Dagnelie

  1. Midline Effects of a Randomized Controlled Trial to Increase the Utilization of Financial Services by Women Business Owners in Rural Indonesia By James C. Knowles
  2. La microfinance dans la région MENA entre performance financière et performance sociale : étude de cas de 18 IMF By Tlili, Afef
  3. Micro-equity for Microenterprises By De Mel, Suresh; McKenzie, David J.; Woodruff, Christopher

  1. By: James C. Knowles
    Abstract: This is the report of a midline evaluation of a randomized controlled trial to increase the utilization of saving and other financial services by women business owners in Indonesia. The trial was motivated by a recent law in Indonesia supporting the development of branchless banking services for a large unbanked rural population and by the results of several studies suggesting that it is possible to stimulate savings and improve a range of downstream outcomes with suitable interventions targeted to under-banked rural populations. The trial was conducted in 400 purposively selected rural and semi-urban villages in five districts of East Java province in which branchless banking services (including basic savings accounts accessible through mobile phones) were available. The randomized interventions supported by this trial include both supply-side treatments (higher agent incentives) and demand-side treatments (training and mentoring of female business owners). The data analyzed include both baseline and midline survey data on female and male business owners and branchless banking agents. Implementation of the trial was delayed due to difficulties in recruiting suitable agents in all 400 trial villages. Numerous supply-side problems, both technical and logistical, were also reported in the monitoring data. However, the midline results indicate that the interventions were successfully delivered, resulting in significant positive effects on key intermediate outcomes, including knowledge and use of mobile banking services and initial take up of a mobile basic savings account. Downstream effects indicate that the supply- and demand-side interventions, particularly in combination, increased women business owners’ savings, empowerment, self-confidence, and economic welfare.
    Date: 2019–03–26
  2. By: Tlili, Afef
    Abstract: This paper is about analyzing the performance of MFIs. Our study focuses on Arab MFIs in the MENA region. We chose 18 MFIs from 7 Arab countries in the MENA region namely : Tunisia ; Morocco ; Egypt ; Palestine ; Jordan ; Lebanon and Yemen. Our goal is to answer the following questions : Are Arab MFIs in the MENA region performing well ? What is the orientation of these institutions ? To answer these questions we followed a methodology that brings together two parties. The first step involves using the DEA method to evaluate the performance of the MFIs in our sample. The second step is to apply the PCA (principal component analysis) on the efficiency scores obtained from the DEA method, in order to determine the orientation of each entity examined.
    Keywords: microfinance, financial performance, social performance.
    JEL: G21 P27 P31
    Date: 2019–04–30
  3. By: De Mel, Suresh; McKenzie, David J.; Woodruff, Christopher
    Abstract: Many microenterprises in developing countries have high returns to capital, but also face risky revenue streams. In principle, equity offers several advantages over debt when financing investments of this nature, but the use of equity in practice has been largely limited to investments in much larger firms. We develop a model contract to make self-liquidating, quasi-equity investments in microenterprises. Our contract has three key parameters that can be used to shift risk between the entrepreneur and the investor, resulting in a continuum of contracts ranging from a debt-like contract that shifts little risk from the entrepreneur to a pure revenue-sharing contract in which the investor absorbs much more of the risk. We discuss implementation choices, and then provide lessons from a proof-of-concept carried out by an investment partner, KGC Equity, which made nine investments averaging $3,800 in Sri Lankan microenterprises. This pilot demonstrates that our contract structure can work in practice, but also highlights the difficulties of micro-equity investments in an environment with weak contract enforcement.
    Keywords: alternative financing; Contract Enforcement In Transition; micro-equity; Microenterprises; Microfinance
    JEL: G21 O12 O16
    Date: 2019–04

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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