nep-mfd New Economics Papers
on Microfinance
Issue of 2022‒10‒10
four papers chosen by
Aastha Pudasainee and Olivier Dagnelie

  1. Microequity and Mutuality: Experimental Evidence on Credit with Performance-Contingent Repayment By Francesco Cordaro; Marcel Fafchamps; Colin Mayer; Muhammad Meki; Simon Quinn; Kate Roll
  2. Microfinance Loan Officers Before and During Covid-19: Evidence from India By Czura, Kristina; Englmaier, Florian; Ho, Hoa; Spantig, Lisa
  3. Demand-side mobile money drivers of financial inclusion: minimum economic growth thresholds for mobile money innovations By Simplice A. Asongu; Raufhon Salahodjaev
  4. Mobile Money Taxation and Informal Workers: Evidence from Ghana’s E-Levy By Akua Anyidoho, Nana; Gallien, Max; Rogan, Mike; van den Boogaard, Vanessa

  1. By: Francesco Cordaro; Marcel Fafchamps; Colin Mayer; Muhammad Meki; Simon Quinn; Kate Roll
    Abstract: We conduct the first field experiment of a performance-contingent microfinance contract. A large food multinational wishes to help micro-distributors in its supply chain with the financing of a productive asset. Working with the firm in Kenya, we compare asset financing under a traditional debt contract to three alternatives: (i) a novel equity-like financing contract, (ii) a hybrid debt-equity contract, and (iii) an index-insurance financing contract. Experimental results reveal large positive impacts from the contractual innovations. These findings demonstrate the economic appeal of microfinance contracts that leverage improved observability of performance to achieve a greater sharing of risk and reward.
    JEL: D25 G41 O12
    Date: 2022–09
  2. By: Czura, Kristina (University of Groningen); Englmaier, Florian (LMU Munich); Ho, Hoa (LMU Munich); Spantig, Lisa (RWTH Aachen University and University of Essex)
    Abstract: The Microfinance industry has been severely affected by Covid-19. We provide detailed insights into how loan officers, the key personnel linking the lender to its borrowers, are affected in their performance and adapt their work to the pandemic. We use administrative records of an Indian Microfinance Institution and detailed panel survey data on performance, performed tasks, and work organization to document how the work environment became more challenging during the pandemic. Loan officers operate in a setting where work from home is hard to implement due to the nature of the tasks and technological constraints. The usual performance indicators appear to be mainly driven by external factors such as the nation-wide debt moratorium. Loan officers worked similar hours, but engaged less in planning activities and completed fewer of the usual tasks. Work perceptions and mental health of loan officers reflect these changes, and perceived stress was particularly high during the period of the debt moratorium.
    Keywords: microfinance; loan officers; covid-19; work organization; India;
    JEL: J22 M54 G21
    Date: 2022–03–23
  3. By: Simplice A. Asongu (Yaounde, Cameroon); Raufhon Salahodjaev (Tashkent, Uzbekistan)
    Abstract: This study provides minimum economic growth (or GDP growth) critical masses or thresholds that should be exceeded in order for demand-side mobile money factors to favorably drive mobile money innovations for financial inclusion in developing countries. The considered mobile money innovations are: mobile money accounts, the mobile phone used to send money and the mobile phone used to receive money. The empirical evidence is based on Tobit regressions. For positive net relationships that are established, an extended analysis is engaged to provide minimum GDP growth levels required to sustain the positive net nexuses. From this extended analysis, in order for economic growth to modulate demand-side mobile money drivers to favorably influence mobile money innovations, minimum GDP growth rates are: (i) 3.875% for the nexus between bank accounts and the mobile phone used to send money; (ii) 3.769 % for the relationship between automated teller machine (ATM) penetration and the mobile used to send money and (iii) 3.666% for the nexus between ATM penetration and the mobile phone used to receive money.
    Keywords: Mobile money; technology diffusion; financial inclusion; inclusive innovation
    JEL: D10 D14 D31 D60 O30
    Date: 2022–01
  4. By: Akua Anyidoho, Nana; Gallien, Max; Rogan, Mike; van den Boogaard, Vanessa
    Abstract: The use of digital financial services, including money transfers and mobile money, have expanded widely in lower-income countries in the past decade; 47 per cent of the population of sub-Saharan Africa (548 million) had a registered mobile money account in 2020, with 29 per cent of those accounts representing active users (Andersson-Manjang and Naghavi 2021: 8). Among lower-income countries for which data is available, the average number of mobile money accounts is more than double the number of commercial bank accounts. In many lower-middle-income countries, mobile money usage is the same or more than commercial bank usage (Bazarbash et al. 2020). Alongside this growth, governments have increasingly sought to tax DFS, rooted in deeper discussions about the role that technology can play in increasing tax revenue and strengthening overall state capacity (Fan et al. 2020; Okunogbe and Santoro 2021). While capturing revenue from DFS can come from many sources, mobile money taxes in particular have often been introduced due to the untapped revenue potential and the relatively convenient and easy nature of the tax handle (Lees and Akol 2021a) – particularly in relation to, say, corporate income taxes on financial service providers. As noted above, the search for revenue is often closely linked to a desire to capture revenue from workers in the informal economy, who are often framed as tax evaders.
    Keywords: Finance, Work and Labour,
    Date: 2022

This nep-mfd issue is ©2022 by Aastha Pudasainee and Olivier Dagnelie. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.