nep-mfd New Economics Papers
on Microfinance
Issue of 2021‒06‒28
one paper chosen by
Aastha Pudasainee and Olivier Dagnelie

  1. Economics of Microcredit-From current crisis to new possibilities By Mitoko, Jeremiah

  1. By: Mitoko, Jeremiah
    Abstract: Following the United Nations declaration of 2005 as the International Year of Microcredit, international organizations began to promote a tighter regulatory and supervisory framework for the microcredit industry. In this paper, I review the theoretical basis of this development considering recent empirical findings that microcredit programs tend to have initial success yet demonstrate few significant benefits beyond two years. I utilize an agent-based simulation as an ex-ante policy assessment tool to examine a tighter regulatory strategy. My findings for Kenya, with possible application to other developing countries and regions, suggest that a less rigid regulatory framework is more likely to lead to more sustained positive impacts than this emulation strategy.
    Keywords: Microcredit Financial Development Agent-based Models Financial Crises – Causes of Financial Crises – Research Government Policy and Regulation
    JEL: E5 F63 G01 G21 O23 O55
    Date: 2021–06–21

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