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on Microfinance |
| By: | Dyna Heng; Serey Chea; Bomakara Heng |
| Abstract: | Interest rate caps, despite their intended objective of broadening financial inclusion, can have undesirable effects on financial inclusion under certain conditions. This paper examines the effect of microfinance-loan interest rate caps on financial inclusion in Cambodia. Based on a difference-in-difference analysis on bank and microfinance supervisory data, results show some unintended impact on financial inclusion. The cap led to a significant increase in non-interest fees charged on new loans following the introduction of an annual cap. Microfinance borrowers declined immediately, amid an increase in credit growth, as microfinance institutions targeted larger borrowers at the expense of smaller ones. Microfinance institutions, responded differently to the cap, considering their own operation and funding costs, and client base. Two years after the cap, institutions resumed lending to a wider group of borrowers with lower funding and operation costs brought by mobile payment development. |
| Keywords: | Financial Inclusion, Interest Rate Caps, Banking Sector; microfinance borrower; microfinance-loan interest rate caps; operation cost; supervisory data; impact of interest rate cap; Loans; Interest rate ceilings; Microfinance; Financial inclusion; Credit; Global |
| Date: | 2021–04–29 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2021/107&r= |
| By: | Hisahiro Naito; Askar Ismailov; Albert Benson Kimaro |
| Abstract: | This study examines the effect of the use of mobile money services on borrowing and saving using data from Tanzania. We estimate the causal effect of the use of mobile money on borrowing, saving, and receiving remittances by applying a two-stage least squares estimation using the shortest distance to the border of the areas with multiple mobile networks, which is a proxy for accessibility to a mobile network, as an instrumental variable, while controlling for distance to financial institutions, population density of the residence, night light luminosity, and other important covariates. We find that when a household experiences a negative shock, mobile money non-users increase borrowing, while mobile money users do not. Further, the use of mobile money increases the probability of saving in mobile money savings accounts and receiving remittances, while it decreases the probability of saving in less liquid assets such as livestock. On the other hand, we find that the effect of the use of mobile money on receiving remittances is the same for those who experience a negative shock and those who do not. These results indicate that the use of mobile money increases the receipt of remittances regardless of negative shocks and changes the saving portfolio, allowing a household to prepare for negative shocks. Hence, a household that uses mobile money does not need to increase borrowing in the face of a negative shock. Consistent with this interpretation, we find that experiencing a negative shock does not decrease the livelihood of mobile money users, while it does reduce that of non-users. |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:tsu:tewpjp:2021-002&r= |
| By: | Robert John Kolesar (Abt Associates, UA - University of Antwerp, Cambodian Ministry of Economy and Finance, CERDI - Centre d'Études et de Recherches sur le Développement International - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne); Guido Erreygers (UA - University of Antwerp); Wim van Dam (ITM - Institute of Tropical Medicine [Antwerp]); Vanara Chea (Cambodian Ministry of Economy and Finance); Theany Choeurng (Cambodian Ministry of Economy and Finance); Soklong Leng (Cambodian Ministry of Economy and Finance) |
| Abstract: | Financial risk protection is a core dimension of Universal Health Coverage. Hardship financing, defined as borrowing and selling land or assets to pay for healthcare, is a measure of last recourse. To inform efforts to improve Cambodia's social health protection system we analyze 2019-2020 Cambodia Socioeconomic Survey data to assess hardship financing, illness and injury related productivity loss, and estimate related economic impacts. We apply two-stage Instrumental Variable multiple regression to address endogeneity relating to net income. More than 98,500 households or 2.7% of the total population resorted to hardship financing over the past year. Factors significantly increasing risk are having an Equity card, higher out-of-pocket healthcare expenditures, illness or injury related productivity loss, and spending of savings. The economic burden from annual lost productivity from illness or injury amounts to USD 459.9 million or 1.7% of GDP. The estimated household economic cost related to hardship financing is USD 250.8 million or 0.9% of GDP. Such losses can be mitigated with policy measures such as linking a catastrophic health coverage mechanism to the Health Equity Funds, capping interest rates on health-related loans, and using loan guarantees to incentivize microfinance institutions and banks to refinance health-related, high-interest loans from money lenders. |
| Keywords: | social health protection,poverty,financial risk protection,Universal Health Coverage,hardship financing |
| Date: | 2021–07–29 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03437399&r= |