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on Microfinance |
| By: | Christian Kurniawan; Xiyu Deng; Adhiraj Chakraborty; Assane Gueye; Niangjun Chen; Yorie Nakahira |
| Abstract: | Microfinance in developing areas such as Africa has been proven to improve the local economy significantly. However, many applicants in developing areas cannot provide adequate information required by the financial institution to make a lending decision. As a result, it is challenging for microfinance institutions to assign credit properly based on conventional policies. In this paper, we formulate the decision-making of microfinance into a rigorous optimization-based framework involving learning and control. We propose an algorithm to explore and learn the optimal policy to approve or reject applicants. We provide the conditions under which the algorithms are guaranteed to converge to an optimal one. The proposed algorithm can naturally deal with missing information and systematically tradeoff multiple objectives such as profit maximization, financial inclusion, social benefits, and economic development. Through extensive simulation of both real and synthetic microfinance datasets, we showed our proposed algorithm is superior to existing benchmarks. To the best of our knowledge, this paper is the first to make a connection between microfinance and control and use control-theoretic tools to optimize the policy with a provable guarantee. |
| Date: | 2022–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2207.12631&r= |
| By: | Schuster, Caroline; Kar, Sohini |
| Abstract: | In the decade since the 2008 global financial crisis, much of the debate has been over whom to blame: reckless speculative finance or irresponsible (often low-income) borrowers. This essay takes up this set of moral arguments about what the poor can and should be able to afford by examining subprime logics at a global scale: subprime empire. Predatory lending in heartland America and development-oriented microcredit in places such as India and Paraguay appear not just to be geographically disparate but also to have different moral valences. After closer inspection, however, we argue that subprime lending and microfinance are two sides of the same coin. Our analysis of microfinance allows us to understand what is happening in the “in-between” as capital flows between financial investors and poor borrowers. By comparing financialization in India and Paraguay, we document and theorize the making of subprime empires that rely on actors within marginal financial sites to stabilize the evaluative frameworks and social interdependencies that make profits flow. We argue that the forms of financial capture and conversion in the “financial in-between” reproduce imperial dynamics by naturalizing the limited expectations of economic subjects of the global south and erasing the violence inherent in these forms of economic redistribution that maintain those expectations as such. |
| JEL: | F3 G3 N0 |
| Date: | 2021–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:112809&r= |
| By: | Dean Karlan; Matt Lowe; Robert Darko Osei; Isaac Osei-Akoto; Benjamin N. Roth; Christopher R. Udry |
| Abstract: | We study the impact of mobile money transfers to a representative sample of low-income Ghanaians during the COVID-19 pandemic. The announcement of the upcoming transfers affects neither consumption, well-being, nor social distancing. Once disbursed, transfers increase food expenditure by 8%, income by 20%, and a social distancing index by 0.08 standard deviations. Over 40% of the transfers were spent on food. The positive effects on income mostly persist at final measurement, eight months after the last transfer. Together, we learn that cash transfers can support households economically while also promoting adherence to public health protocols during a pandemic. |
| JEL: | H51 H84 O12 |
| Date: | 2022–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30309&r= |