nep-mfd New Economics Papers
on Microfinance
Issue of 2019‒08‒12
ten papers chosen by
Aastha Pudasainee and Olivier Dagnelie

  1. Improving Access to Banking: Evidence from Kenya By Franklin Allen; Elena Carletti; Robert Cull; Jun QJ Qian; Lemma Senbet; Patricio Valenzuela
  2. The Impact of Microcredit on Agricultural Technology Adoption and Productivity: Evidence from Randomized Control Trial in Tanzania By Yuko Nakano; Eustadius F.Magezi
  3. Statuts juridiques, gouvernance et performance des institutions de microfinance au Cameroun By DJOUFOUET, Wulli Faustin
  4. The gender of debt and the financialisation of development. Insights from rural southern India By Isabelle Guérin; Christophe Nordman; Elena Reboul
  5. Does Social Health Insurance Help Owners of Micro- and Small Firms Cope with Family Hardships? Evidence from Indonesia By Lau, Siew Yee; Parinduri, Rasyad; Lee, Yoong Hon
  6. The Impact of Mobile Money in Developing Countries By Jana Hamdan
  7. The impact of e-wallet on informal farm entrepreneurship development in rural Nigeria By Joseph I. Uduji; Elda N. Okolo-Obasi; Simplice A. Asongu
  8. Adoption of improved crop varieties by involving farmers in the e-wallet program in Nigeria By Joseph I. Uduji; Elda N. Okolo-Obasi
  9. Electronic wallet technology and the enabling environment of smallholder farmers in Nigeria By Joseph I. Uduji; Elda N. Okolo-Obasi; Simplice A. Asongu
  10. Young Rural Women Participation in the E-Wallet Programme and Usage Intensity of Modern Agricultural Inputs in Nigeria By Joseph I. Uduji; Elda N. Okolo-Obasi

  1. By: Franklin Allen; Elena Carletti; Robert Cull; Jun QJ Qian; Lemma Senbet; Patricio Valenzuela
    Abstract: We explore the relationship between bank branch expansion, financial inclusion and profitability for Equity Bank. Unlike traditional banks in Kenya, Equity Bank pursues branching strategies that target underserved territories and less privileged households. Its presence has a positive and significant impact on households’ access to bank accounts and credit. It increased financial inclusion by 31 percent of the adult population between 2006 and 2015. Access is especially improved for Kenyans who are less educated, do not own their own home and live in lessdeveloped areas. Equity Bank’s business model proves to be profitable both at bank and branch level.
    Keywords: Equity Bank, bank penetration, bank account, microfinance.
    JEL: G2 O1 R2
    Date: 2018
  2. By: Yuko Nakano; Eustadius F.Magezi
    Abstract: This paper examines the impact of microcredit on the adoption of technology and productivity of rice cultivation in Tanzania. Collaboratively with BRAC, a globally-known microfinance institution, we offered microcredit specifically designed for agriculture to randomly selected farmers. We estimate the intention-to-treat effect (ITT) as well as the local average treatment effect (LATE) of microcredit, by using the eligibility to the program as an instrumental variable (IV). Overall, we find statistically weak or even null evidence that the BRAC program increases the use of chemical fertilizer. Also, credit use does not result in an increase in paddy yield, profit from rice cultivation, or household income for borrowers. Our results from sub-sample analyses suggest that credit does not increase the fertilizer use by those who have better access to irrigation water as they have already applied the amount of fertilizer near to the recommended level. On the other hand, credit increases the fertilizer use by those who have limited access to irrigation water and have previously used little fertilizer. However, possibly due to the poor yield response to fertilizer, the increase in chemical fertilizer use does not result in higher yield for them. We also observed similar phenomenon for the comparison between trained and non-trained borrowers before the intervention.
    Keywords: Microcredit, Technology Adoption, Agriculture, Tanzania, Africa
    Date: 2019–06
  3. By: DJOUFOUET, Wulli Faustin
    Abstract: The main objective of this article is to analyse the impact of governance mechanisms in general and their interactions in particular on the performance of microfinance institutions while taking into account their legal forms. To achieve this objective, a multiple regression was carried out on a sample of 62 microfinance institutions whose data collected covers a period from 2009 to 2015. Our results show that large boards of directors do not add value to governance in microfinance co-ops. Private microfinance institutions, on the other hand, need to have a large board in order to benefit from a multiplicity of skills and increase staff productivity. Second-tier microfinance institutions that want to increase the productivity of their staff must review the number of women on their boards. They need to redefine their recruitment and compensation policies.
    Keywords: Microfinance, interactions, financial performance, governance
    JEL: G00 G2
    Date: 2018–02–11
  4. By: Isabelle Guérin; Christophe Nordman; Elena Reboul
    Abstract: Proponents of financial inclusion regret that women do not have sufficient access to credit, while critics of financialization consider that women are too indebted. But little is actually known about women’s debt/credit in quantitative terms, mostly because of a lack of data. Based on Indian data disaggregated by sex, this descriptive paper analyses the gender of debt, at the prism of caste and poverty. We find that women are already heavily indebted, borrowing much more than men relatively to their income. Furthermore, iemale debt is predominantly - and markedly more than male – used to make both end meets, while productive investment remains in great part a male privilege. Last, it is in the poorest and the lowest caste households that women manage the highest shares of household debt. From a theoretical perspective, these results underline the gender earmarking of debt and credit, ie the fact that male and female debt/credit do not have the same meaning and use. They also confirm the gender dimension of behaviour, women’s behaviour being constrained by their family affiliation, poverty level and caste, which is much less the case for men. Interms of policy implications, these results question microcredit policies: not only microcredit does not tackle the gender of debt, but it may even strengthen it further.
    Keywords: Gender; Debt; Poverty; Caste; India
    JEL: D14 J16 O16
    Date: 2019–07–22
  5. By: Lau, Siew Yee; Parinduri, Rasyad; Lee, Yoong Hon
    Abstract: Micro- and small firms lack access to external finance and the labour market so that they are vulnerable to family hardships experienced by the owners such as deaths or sickness of family members. The literature is thin on how these firms cope with family hardships, in particular on whether owners’ access to social health insurance helps. We examine whether a social health insurance in Indonesia, Askeskin, protects owners of micro- and small firms against family hardships. We find some evidence Askeskin reduces the adverse effects of recent deaths in the family, outpatient care, and traffic accidents on net profits; Askeskin also protects the firms’ assets against owners’ outpatient care need. Social health insurance may, therefore, improve micro- and small firms’ survival, which (because most people in developing countries’ labour markets work in micro- and small firms) helps governments’ efforts to eradicate poverty.
    Keywords: social health insurance, Askeskin, family hardships, micro- and small firms, firm performance, Indonesia
    JEL: I13 I18 L25 O12
    Date: 2019–07–22
  6. By: Jana Hamdan
    Abstract: Mobile money is a success story in terms of facilitating account ownership and payments in developing and emerging countries. Today, telecommunication companies offer mobile money services across more than 90 countries. The most popular services are deposits and instant digital money transfers between users. Widespread mobile money adoption is boosting financial inclusion, reducing in transaction costs and facilitating successful consumption smoothing and risk sharing among users. Nonetheless, mobile money is also associated with heterogeneous effects and risks among the poor and vulnerable populations. This article reviews the recent literature on the impact of mobile money in developing countries.
    Date: 2019
  7. By: Joseph I. Uduji (University of Nigeria, Nsukka, Nigeria); Elda N. Okolo-Obasi (University of Nigeria, Nsukka, Nigeria); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: Transforming agriculture from a largely subsistence enterprise to a profitable commercial venture is both a prerequisite and a driving force for accelerated development and sustainable growth in sub-Saharan Africa. The objective of this investigation is to assess the impact of the Federal Government of Nigeria (FGN) e-wallet programme on informal farm entrepreneurship development in rural Nigeria. Informal sector farmers are those that are not legally registered at the national level though could be connected to a registered association. The research is motivated by the absence of literature focusing on the problem statement or objective of study. One thousand, one hundred and fifty-two rural farmers were sampled across the six geo-political zones of Nigeria. Results from the use of a bivariate probit model indicate that the mobile phone-based technology via the e-wallet programme is a critical factor that has enhanced farm entrepreneurship in rural Nigeria. However, results also show that the impact of mobile phones (as a channel to accessing and using modern agricultural inputs) is contingent on how mobile networks are able to link farmers who live in rural areas and work mainly in farming. The results suggest that increasing mobile phone services in rural Nigeria enhances farmers’ knowledge, information and adoption of improved farm inputs and by extension, spurs rural informal sector economic activities in sub-Saharan Africa. Implications for practice, policy and research are discussed.
    Keywords: Informal sector’s adoption, electronic wallet technologies
    JEL: Q10 Q14 L96 O40 O55
    Date: 2018–01
  8. By: Joseph I. Uduji (University of Nigeria, Nsukka, Nigeria); Elda N. Okolo-Obasi (University of Nigeria, Nsukka, Nigeria)
    Abstract: The amount of improved seed used in Nigeria is extremely low. Overall, only 5 to 10 percent of cultivated land is planted with improved seeds, and about 10 percent of rural farmers use improved varieties. The objective of this investigation was to identify determinants of adoption of improved seed by farmers not participating in and those participating in the federal government’s e-wallet program in Nigeria. We determined the impact of the e-wallet program on adoption of improved seed in rural areas. One thousand, two hundred (1200) rural farmers were sampled across six geopolitical zones of Nigeria. Results from the use of a bivariate probit model indicated that the e-wallet program continued to become increasingly popular among rural farmers; and that farmers’ literacy, ownership of a mobile phone, value output, mobile network coverage, power for charging phone batteries and contact with extension agents were the positive determinants of farmer participation in thee-wallet program. Cultural obstacles to married women, growers’ age, and increased distance to registration and input collection centers reduced farmers’ tendency to participate in the e-wallet program. The results also showed that rural farmers depended on the e-wallet program for increased use and adoption of improved seed in Nigeria, to boost food security in sub-Saharan Africa. The results suggested the need for an improved e-wallet model by lessening constraints mostly associated with rural information and communication infrastructure, and distance to the registration and input collection centers.
    Keywords: Agricultural transformation agenda; bivariate probit model
    JEL: J43 O40 O55 Q10
    Date: 2018–01
  9. By: Joseph I. Uduji (University of Nigeria, Nsukka, Nigeria); Elda N. Okolo-Obasi (University of Nigeria, Nsukka, Nigeria); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: Purpose – The purpose of this paper is to critically examine the impact of growth enhancement support scheme (GESS) on the enabling environment of smallholder farmers in sub-Saharan Africa. Its special focus is to investigate the GESS impact on access to rural farm credit and transport cost of smallholder farmers in the agricultural transformation agenda (ATA) in Nigeria. Design/methodology/approach – This paper adopts a survey research technique, aimed at gathering information from a representative sample of the population, as it is essentially cross-sectional that describes and interprets what exist at present. A total of one thousand, two hundred farmers were sampled across the six geopolitical zones of Nigeria. Findings – Results from the use of a double-hurdle model indicate that the GESS has a significant impact on farmers’ access to credit, but does not significantly affect rural farm transport cost, which subsequently influence the price of food in the country. Practical implication – This implies that if the federal government of Nigeria is to work towards an ideal agricultural transformation agenda, transport networks should be closely aligned with the GESS priorities to provide connectivity to rural areas that provide most of the country’s agricultural output. Originality/value – This research adds to the literature on agricultural and rural development debate in developing countries. It concludes that embracing rural finance and transportation infrastructure should form the foundation of the ATA in Nigeria, which in turn would provide the enabling environment for more widespread rural economy in sub-Saharan Africa.
    Keywords: Growth enhancement support scheme, Electronic wallet technology, Sub-Saharan Africa
    JEL: Q10 Q14 L96 O40 O55
    Date: 2019–01
  10. By: Joseph I. Uduji (University of Nigeria, Nsukka, Nigeria); Elda N. Okolo-Obasi (University of Nigeria, Nsukka, Nigeria)
    Abstract: We assess the extent young rural women (YRW) participate in the federal government (FGN)e-wallet programme and the subsequent impact on usage intensity of modern agricultural inputs in Nigeria. Six hundred YRW were sampled across six geopolitical zones of Nigeria. Using double-hurdle, results show that YRW rarely participate in the e-wallet programme due to the cultural and traditional context which is anchored in beliefs, norms and practices that breed discrimination and feminized poverty. This implies that Nigeria’s agricultural transformation agenda would only succeed if the FGN is able to draw on all its resources and talents, and if the YRW can be able to participate fully in the e-wallet programme. This will require intensified efforts to eliminate discrimination and promote equalities. To bridge the gender gap, the federal ministry of agriculture and rural development should pay close attention to the extent the participation of unmarried girls and young women, including nursing mothers in the e-wallet programme, may be limited by the cultural and/or domestic and child care duties. The findings suggest that FGN should discourage gender disparities in unequal access to agricultural inputs and pervasive, inequality, especially over ownership of agricultural land that limit women’s contribution to household food baskets.
    Keywords: Gender, e-wallet programme, modern agricultural inputs, young rural women, double-hurdle model, Nigeria
    JEL: J43 O40 O55 Q10
    Date: 2018–01

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