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on Microfinance |
| By: | Melvyn Weeks; Tobias Gabel Christiansen |
| Abstract: | Various poverty reduction strategies are being implemented in the pursuit of eliminating extreme poverty. One such strategy is increased access to microcredit in poor areas around the world. Microcredit, typically defined as the supply of small loans to underserved entrepreneurs that originally aimed at displacing expensive local money-lenders, has been both praised and criticized as a development tool (Banerjee et al., 2015b). This paper presents an analysis of heterogeneous impacts from increased access to microcredit using data from three randomised trials. In the spirit of recognising that in general the impact of a policy intervention varies conditional on an unknown set of factors, particular, we investigate whether heterogeneity presents itself as groups of winners and losers, and whether such subgroups share characteristics across RCTs. We find no evidence of impacts, neither average nor distributional, from increased access to microcredit on consumption levels. In contrast, the lack of average effects on profits seems to mask heterogeneous impacts. The findings are, however, not robust to the specific machine learning algorithm applied. Switching from the better performing Elastic Net to the worse performing Random Forest leads to a sharp increase in the variance of the estimates. In this context, methods to evaluate the relative performing machine learning algorithm developed by Chernozhukov et al. (2019) provide a disciplined way for the analyst to counter the uncertainty as to which algorithm to deploy. |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2011.10509&r=all |
| By: | Antonia Grohmann; Tabea Lakemann; Helke Seitz |
| Abstract: | This study examines the effect of a soft commitment device in the form of a savings goal calendar on savings for small business owners in Kampala, Uganda. We run a randomized controlled trial (RCT) under which the treatment group receives a calendar designed to set savings goals and to make a plan to reach this goal. The control group is given a plain calendar. We find no average effect on savings, but show that present-biased individuals save more when given the calendar. Further examinations indicate that present-biased individuals are more likely to use the calendar, suggesting that, in line with theory, present-biased individuals have a demand. |
| Keywords: | Soft commitment, savings, time preferences, small business growth |
| JEL: | O12 D14 D22 C93 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1919&r=all |
| By: | Quibria, M.G. |
| Abstract: | Poverty and Policy in the Developing World: Before and After the Pandemic By M.G. Quibria, Morgan State University This paper begins with the definition, measurement and other conceptual issues related to poverty in the developing world. It then makes an international comparison of experiences in poverty alleviation —how various countries and regions have fared in alleviating poverty before the Covid-19 Pandemic. The next section reviews the effectiveness of various approaches to poverty reduction, which are grouped under two broad headings: inclusive growth and redistributive policies to empower the poor. Under inclusive growth, it reviews the various strategies of growth in alleviating. In particular, it draws on the experiences of successful Asian countries and examines the salience of different policies and strategies such outward-orientation, domestic liberalization and investments in physical infrastructure. It then examines the role of various redistributive policies, which include investments in human capital, land reform, microcredit, and income transfer and safety net programs. The article concludes with some prognostications about the effectiveness of various policies and strategies in the post-pandemic developing world. |
| Keywords: | poverty alleviation, openness, governance, microcredit, developing Asia and RCTs |
| JEL: | I32 O11 O2 |
| Date: | 2020–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:104240&r=all |
| By: | Antonia Grohmann; Lukas Menkhoff |
| Abstract: | About two billion people in the world do not own a financial account and there are many more who use financial services only occasionally. In the past, initiatives which address these problems of financial exclusion focused on the supply side of financial markets, in particular by increasing the branch network of banks and by offering cheap bank products. While this had the desired effect, recent evidence shows that improving the demand side of financial markets is also helpful. There are numerous initiatives and public policies to enhance financial education and to improve financial literacy. Microeconometric studies, often randomized controlled trials, show that financial literacy has a causal effect on financial inclusion; educated individuals understand the advantages of financial services better but also feel more confident about contacting providers. Cross-country evidence indicates that in poorer countries improved financial supply and demand are substitutes, i.e., they work independently of each other. In higher-income economies, however, these instruments are complements, i.e., it is useful to improve financial literacy in order to make better use of available financial services. |
| Keywords: | Financial inclusion, financial literacy, financial development |
| JEL: | G53 O16 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1914&r=all |