nep-mfd New Economics Papers
on Microfinance
Issue of 2020‒10‒19
four papers chosen by
Olivier Dagnelie
Université de Caen

  1. Extension Demonstration: Grameen Microfinance Methods and Capital Access for Low-Income Female Entrepreneurs By Edelman, Mark A.
  2. Financial inclusion with hybrid organisational forms: Microfinance, philanthropy, and the poor law in Ireland, c. 1836-1845 By McLaughlin, Eoin; Pecchenino, Rowena A.
  3. Time inconsistency and endogenous borrowing constraints By Bhattacharya, Joydeep; Bishnu, Monisankar; Wang, Min
  4. Joint liability and adaptation to climate change: evidence from Burkinabe cooperatives By Pauline Castaing

  1. By: Edelman, Mark A.
    Abstract: A nonprofit community development financial institution and Extension collaborated to conduct a demonstration project to evaluate efficacy of Grameen peer-group microfinance methodology in addressing barriers faced by lowincome women entrepreneurs in a small metro area. Program performance metrics achieved by 284 low-income, culturally diverse, primarily women entrepreneurs over five years included: a loan repayment rate of 99+ percent, increased average client income, savings accumulation at a local bank, and increased opportunities to improve average credit scores. Client surveys indicated peer-group methods, program structure, incentives for individual behaviors and group responsibilities provided opportunity to develop confidence, leadership skills, and teamwork.
    Date: 2020–07–10
  2. By: McLaughlin, Eoin; Pecchenino, Rowena A.
    Abstract: The turbulent 1830s saw a sequence of great political and social reforms in the UK. One such reform was the introduction of a locally funded poor law in Ireland. The development of a nascent welfare system in 1838 coincided with a boom in the formation of microfinance institutions in Ireland. The focus of this study is the expansion of a hybrid organisational form, Loan Fund Societies (LFSs), in the ten years prior to the Great Irish Famine of 1845-49. LFSs were legally established with a conflictual structure: balancing acting as commercially viable charitable institutions that were required to provide credit to the deserving poor to enable them to be self-sufficient, while dedicating their "profits" to supporting the indigent poor. This study uses an analytical framework drawing inspiration from institutional logics to explore and better understand Irish microfinance in the early nineteenth century, a period of profound socio-economic and socio-religious change. It seeks to explain the factors that motivated the establishment and de-establishment of microfinance institutions amidst this tumult. Legislative changes in LFS business parameters in 1843 made the tensions between being charitable and commercial sustainability salient and, for some, continued existence untenable.
    Keywords: microfinance,institutional logics,development,Ireland
    JEL: G21 H75 I38 N23 N33 N83
    Date: 2020
  3. By: Bhattacharya, Joydeep; Bishnu, Monisankar; Wang, Min
    Abstract: This paper studies the welfare of time-inconsistent, partially sophisticated agents living under two different regimes, one with complete, unfettered credit markets (CM) and the other with endogenous borrowing constraints (EBC) where the borrowing limits are set to make agents indifferent between defaulting and paying back their unsecured loans. The CM regime cannot deliver the first best because partially sophisticated agents would undo plans laid out by previous selves and borrow too much. Somewhat counterintuitively, in some cases, the EBC regime may deliver higher welfare than the CM regime. These results speak to the academic debate surrounding the creation and functioning of the CFPB (Consumer Financial Protection Bureau) in the U.S. and its implementation of the ability-to-repay rule on lenders after the 2007-8 crisis. Such institutions generate commitment publicly and may help time-inconsistent agents economize on the costs of private commitment provision.
    Date: 2020–04–03
  4. By: Pauline Castaing (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: In semi-arid lands, the resilience of farmers facing climate change is uncertain. The main objective of this paper is to explore whether mutual assistance within a group of cotton farmers implies reduced adoption of risk-mitigating strategies. I investigate the case of Burkina Faso where cotton farmers collectively purchase inputs from the cotton wholesale companies and pay for their purchase under the constraint of joint liability. Specifically, I try to understand whether this joint liability is correlated with the adoption of strategies which reduce exposure to climatic risks. I proxy peer pressure by the size of the network and find it to be associated with reduced investment in both incremental and transformational self-protection against weather shocks.
    Keywords: Burkina Faso,Joint liability,group lending
    Date: 2020–09–13

This nep-mfd issue is ©2020 by 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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