nep-mfd New Economics Papers
on Microfinance
Issue of 2019‒08‒19
five papers chosen by
Olivier Dagnelie
Université de Caen

  1. Is the credit worth it? For-profit lenders in microfinance with rational and behavioral borrowers By de Quidt, Jonathan; Ghatak, Maitreesh
  2. The Effects of Access to Credit on Productivity: Separating Technological Changes from Changes in Technical Efficiency By Jimi, Nusrat Abedin; Nikolov, Plamen; Malek, Mohammad Abdul; Kumbhakar, Subal C.
  3. Incentive scheme and productivity in microfinance institutions in Benin By ACCLASSATO HOUENSOU, Denis; SENOU, Melain Modeste
  4. Small And Medium Entreprise Policy Reforms And Formalization Performance In Nigeria By Friday K. Ohuche
  5. Mobile Money and the Labor Market: Evidence from Developing Countries By Chiara, De Gasperin; Valentina, Rotondi; Luca, Stanca

  1. By: de Quidt, Jonathan; Ghatak, Maitreesh
    Abstract: The bulk of the literature on microcredit has focused on either not‐for‐profit lenders or assumes a perfectly competitive, zero‐profit market equilibrium. Yet the market has experienced a significant shift toward for‐profit lending and the assumptions of perfect competition are likely to be too strong in many locations. We review the state of the literature on for‐profit lending in microcredit, consider its implications for both conventionally ‘rational’ borrowers and for borrowers with behavioral biases, and point out directions for future research.
    JEL: F3 G3
    Date: 2018–01–25
  2. By: Jimi, Nusrat Abedin (State University of New York); Nikolov, Plamen (State University of New York); Malek, Mohammad Abdul (Kyoto University); Kumbhakar, Subal C. (Binghamton University, New York)
    Abstract: Improving productivity among microenterprises is important, especially in low-income countries where market imperfections are pervasive, and resources are scarce. Relaxing credit constraints can increase the productivity of microenterprises. Using a field experiment involving agricultural microenterprises in Bangladesh, we estimated the impact of access to credit on the overall productivity of rice farmers and disentangled the total effect into technological change (frontier shift) and technical efficiency changes. We found that relative to the baseline rice output per decimal, access to credit resulted in, on average, approximately a 14 percent increase in yield, holding all other inputs constant. After decomposing the total effect into the frontier shift and efficiency improvement, we found that, on average, around 11 percent of the increase in output came from changes in technology, or frontier shift, while the remaining 3 percent was attributed to improvements in technical efficiency. The efficiency gain was higher for modern hybrid rice varieties, and almost zero for traditional rice varieties. Within the treatment group, the effect was greater among pure tenant and mixed-tenant microenterprise households compared with microenterprises that only cultivated their own land.
    Keywords: field experiment, microfinance, credit, efficiency, productivity, farmers, South Asia
    JEL: E22 H81 Q12 D2 O12 O16
    Date: 2019–07
  3. By: ACCLASSATO HOUENSOU, Denis; SENOU, Melain Modeste
    Abstract: This article aims to analyze the productive effects of financial and non-financial incentive in microfinance institutions in Benin. We estimate a Cobb-Douglas production function augmented by the Incentive Scheme on an unbalanced panel of 14 registered MFIs over the period 2007-2017. The findings of this study show that non-financial incentives positively impact the outreach whereas the financial incentives have a negative effect on outreach. They further suggest that a well-designed incentive scheme is a powerful tool to overcome free riding and other asymmetric information problems in a costly monitoring environment.
    Keywords: Financial incentive, Non-Financial Incentive, Productivity, MFI, Benin
    JEL: D21 O31
    Date: 2019–07–31
  4. By: Friday K. Ohuche (Governors Department, Central Bank of Nigeria)
    Abstract: In this study we employ the “Difference Principle” approach to evaluate the costs and benefits of firms transiting from an informal to formal sector (Formalization). We focus on both the differential impacts and effectiveness of policy reforms such as microfinance policy and other related micro-enterprise policies aimed at attracting informal firms into the formal sector. Introduction of Institutional reforms presupposes that firms in the informal sector maximizes a given welfare condition which acts as an incentive to formalize.
    Keywords: Small and Medium Enterprises, Difference Principle Approach, Policy.
    JEL: R10
    Date: 2018–06
  5. By: Chiara, De Gasperin; Valentina, Rotondi; Luca, Stanca
    Abstract: Mobile money can play an important role in improving financial inclusion and, as a consequence, employment outcomes, especially in areas where adequate financial infrastructures are lacking. In this paper, we study the effects of mobile money use on the employment outcomes of individuals in 8 developing countries. Our findings indicate that, relative to non-users, individuals who use mobile money are more likely to become self-employed and to receive a regular wage. In particular, the positive association between mobile money use and regular wage is found to be robust also when explicitly addressing the potential endogeneity of mobile mobile money. Overall, the evidence suggests that policies aimed at favoring access to and use of mobile money can provide an e ective and relatively inexpensive tool in the agenda for sustainable development.
    Keywords: Mobile Money, Digital Revolution, Labor Market.
    JEL: O16 O17 O33
    Date: 2019–03

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