nep-mfd New Economics Papers
on Microfinance
Issue of 2023‒01‒09
four papers chosen by
Aastha Pudasainee and

  1. Dynamic analysis of the interest rate determinant in microfinance institutions By Djibril Faye; Zaka Ratsimalahelo
  2. Returns on Informal and Formal finance for Indian Informal firms: A Pseudo panel data analysis By POSTI, LOKESH; KHOLIYA, MAMTA; POSTI, AKHILESH KUMAR
  3. Fintech Entry, Firm Financial Inclusion, and Macroeconomic Dynamics in Emerging Economies By Finkelstein-Shapiro, Alan; Mandelman, Federico S.; Nuguer, Victoria
  4. Technology, Identification, and Access to Social Programs: Experimental Evidence from Panama By Reyes, Angela; Roseth, Benjamin; Vera-Cossio, Diego A.

  1. By: Djibril Faye (CRESE EA3190, Univ. Bourgogne Franche-Comté, F-25000 Besançon, France); Zaka Ratsimalahelo (CRESE EA3190, Univ. Bourgogne Franche-Comté, F-25000 Besançon, France)
    Abstract: In this paper, we examine the interest rate of microfinance institutions in a dynamic framework in order to consider the anticipation phenomenon. The fluctuations that affect the development of MFIs are often unpredictable and may be fast. The results show an interest rate increase over time, which is more significant within cooperatives and Non-Governmental Organizations (NGOs) compared to other MFIs categories. Our results clearly show that these MFI types suffer from more exogenous shocks.
    Keywords: Interest rate, Microfinance, GMM-System, Dynamic panel, Fisher test statistic
    JEL: G2 G21 C1 E43 N20
    Date: 2022–12
    Abstract: The study investigates the differential impact of various sources of finance on informal firm performance. In the informal sector, where access to finance is limited, we investigate how productivity varies with different sources of finance. Given the data limitations, a pseudo-panel data design was used by combining the three only available, independent cross-sectional surveys conducted by the National Sample Survey Office between 1999-2000 and 2015-16. Using formal and informal credit as two different sources of finance and total factor productivity (TFP) as the primary measure of firm performance, we find a positive relationship among them across all major industries; however, the impact of formal finance was higher than informal credit. Our results stand robust against alternative performance measures. Additionally, to address endogeneity concerns, dynamic panel data analysis was adopted. Obtained findings convey essential policy implications for intensification of financial inclusion and financial literacy.
    Keywords: Informal Sector, Finance, Credit, Total Factor Productivity, Pseudo Panel, India
    JEL: D2 L21 L25 M2 O14
    Date: 2022–12–07
  3. By: Finkelstein-Shapiro, Alan; Mandelman, Federico S.; Nuguer, Victoria
    Abstract: Financial inclusion is strikingly low in emerging economies. In only a few years, financial technologies (fintech) have led to a dramatic expansion in the number of non-traditional credit intermediaries, but the macroeconomic and credit-market implications of this rapid growth of fintech are not known. We build a model with a traditional banking system and endogenous fintech intermediary creation and find that greater fintech entry delivers positive long-term effects on aggregate output and consumption. However, greater entry bolsters aggregate firm financial inclusion only if it stems from lower barriers to accessing fintech credit by smaller, unbanked firms. Decreasing entry costs for fintech intermediaries alone has only marginal effects in the aggregate. While firms that adopt fintech credit are less sensitive to domestic financial shocks and contribute to a reduction in output volatility, greater fintech entry also leads to greater volatility in bank credit, thereby introducing a tradeoff between output volatility and credit-market volatility.
    JEL: E24 E32 E44 F41 G21
    Date: 2022–01
  4. By: Reyes, Angela; Roseth, Benjamin; Vera-Cossio, Diego A.
    Abstract: Access to identification cards (IDs) is often required to claim government benefits. However, it is unclear which policies to increase ID ownership are more effective. We experimentally analyze the effect of two policy interventions to induce the timely renewal of identification cards on access to a government social program in Panama. Sending reminders about expiration dates increased the probability of on-time renewals and of accessing benefits from a social program by 12 and 4.3 percentage points, respectively, relative to a control group. In contrast, allowing individuals to renew their ID online only increased renewals and access to benefits by 8 and 2.9 percentage points, respectively. This result was driven by lower-income individuals. The results suggest that policies to increase ownership of valid identity documentation can reduce inclusion errors in government programs and that simply granting access to digital tools may not be enough to unlock important effects.
    Keywords: Nudges;Social protection
    JEL: D90 H53 I38
    Date: 2021–08

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