nep-mfd New Economics Papers
on Microfinance
Issue of 2021‒05‒03
four papers chosen by
Olivier Dagnelie
Université de Caen

  1. Is Mobile Money Changing Rural Africa? Evidence from a Field Experiment By Catia Batista; Pedro C. Vicente
  2. Circular economy, banks and other financial institutions: what’s in it for them? By Ozili, Peterson K
  3. Rural Transformation, Inequality, and the Origins of Microfinance By Suesse, Marvin; Wolf, Nikolaus
  4. Material barriers, cultural boundaries: A mixed-methods analysis of gender and labour market segmentation in Bangladesh By Naila Kabeer; Lopita Huq; Muhammad Mahabub Rahaman

  1. By: Catia Batista (Nova School of Business and Economics, CReAM, IZA and NOVAFRICA); Pedro C. Vicente (Nova School of Business and Economics, BREAD, and NOVAFRICA)
    Abstract: Rural areas in sub-Saharan Africa are typically underserved by financial services. We measure the economic impact of introducing mobile money for the first time in rural villages of Mozambique using a randomized control trial. This intervention led to consumption smoothing through increased transfers as a response to both geo-referenced village-level floods and household-level idiosyncratic shocks. Importantly, we find that the availability of mobile money increased migration out of rural areas, where we observe lower agricultural activity and investment. Our work illustrates how financial inclusion can accelerate African urbanization and structural change while improving welfare in rural areas.
    Keywords: mobile money, migration, remittances, technology adoption, insurance, consumption smoothing, investment, savings, Mozambique, Africa.
    JEL: O12 O15 O16 O33 G20 R23
    Date: 2021–04
  2. By: Ozili, Peterson K
    Abstract: In this paper, I highlight the benefit of the circular economy to banks and other financial institutions. The paper uses discourse analysis methodology to present an overview of the circular economy concept and the benefit of the circular economy to banks and other financial institutions. The findings show that some benefit of the circular economy to banks include: (i) greater loan diversification opportunities, (ii) promotes responsible and sustainable banking, (iii) increased lending to circular clients and the recycling sector which means more profit for banks, and (iv) correcting the bad perception about banks in society. Some benefit of the circular economy to other financial institutions include: (i) issuance of special insurance policies for reused products; (ii) greater sustainability-adjusted return on investment; (iii) greater funding to microfinance institutions; and (iv) more opportunities for collaborative funding to circular businesses. This study contributes to the scant literature that examine the role of the finance industry in the circular economy.
    Keywords: circular economy, linear economy, banks, financial institutions, criticism, sustainability, climate change, waste, insurance, sustainable finance, sustainable banking, hedge funds, microfinance institutions
    JEL: G02 G21 G22 G23 G24 G29 Q01 Q20 Q32 Q54 Q56
    Date: 2021
  3. By: Suesse, Marvin (Trinity College Dublin); Wolf, Nikolaus (HU Berlin and CEPR)
    Abstract: What determines the development of rural financial markets? Starting from a simple theoretical framework, we derive the factors shaping the market entry of rural microfinance institutions across time and space. We provide empirical evidence for these determinants using the expansion of credit cooperatives in the 236 eastern counties of Prussia between 1852 and 1913. This setting is attractive as it provides a free market benchmark scenario without public ownership, subsidization, or direct regulatory intervention. Furthermore, we exploit features of our historical set-up to identify causal effects. The results show that declining agricultural staple prices, as a feature of structural transformation, leads to the emergence of credit cooperatives. Similarly, declining bank lending rates contribute to their rise. Low asset sizes and land inequality inhibit the regional spread of cooperatives, while ethnic heterogeneity has ambiguous effects. We also offer empirical evidence suggesting that credit cooperatives accelerated rural transformation by diversifying farm outputs.
    Keywords: microfinance; credit cooperatives; rural transformation; land inequality; prussia;
    JEL: G21 N23 O16 Q15
    Date: 2019–12–04
  4. By: Naila Kabeer; Lopita Huq; Muhammad Mahabub Rahaman
    Abstract: Data on female labour force participation in Bangladesh suggest that, despite the increase in female-intensive employment opportunities through microfinance, export garment manufacturing, and community-based services, the majority of working women are concentrated in home-based activities.
    Keywords: Gender inequality, Labour market segmentation, Mixed methods, Social norms, South Asia, Discrimination
    Date: 2021

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