nep-mfd New Economics Papers
on Microfinance
Issue of 2023‒01‒16
six papers chosen by
Aastha Pudasainee and

  1. Coping with shocks: How Self-Help Groups impact food security and seasonal migration By Timothée Demont
  2. Fostering the Social and Solidarity Economy and Formalizing Informality in MENA Countries By Philippe Adair; Vladimir Hlasny; Mariem Omrani; Kareem Sharabi Rosshandler
  3. Funding Female Entrepreneurs in MENA Countries (2019): Self-Selection and Discrimination By Imène Berguiga; Philippe Adair
  4. Estimating Social Network Models with Missing Links By Arthur Lewbel; Xi Qu; Xun Tang
  5. Sustainability and trust: financial inclusion in the Global South By Úbeda, Fernando; Mendez, Alvaro; Forcadell, Francisco Javier
  6. Financial Integration, Inclusion and Stability During Crises: Insights from the MENA Region By Samar Abdelmageed

  1. By: Timothée Demont (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Combining seven years of household data from an original eld experiment in villages of Jharkand, East India, with meteorological data, this paper investigates how Indian Self-Help Groups (SHGs) enable households to withstand rainfall shocks. I show that SHGs operate remarkably well under large covariate shocks. While credit access dries up in control villages one year after a bad monsoon, reecting strong credit rationing from informal lenders, credit ows are counter-cyclical in treated villages. Treated households experience substantially higher food security during the lean season following a drought and increase their seasonal migration to mitigate expected income shocks. Credit access plays an important role, together with other SHG aspects such as peer networks. These ndings indicate that local self-help and nancial associations can help poor farmers to cope with climatic shocks and to implement risk management strategies.
    Keywords: Micronance,credit,climatic shocks,risk management,resilience,seasonal migration,food security
    Date: 2022–07
  2. By: Philippe Adair (University Paris-Est Créteil); Vladimir Hlasny (United Nations Economic and Social Commission for Western Asia); Mariem Omrani (UNDP); Kareem Sharabi Rosshandler (The Economic Growth Pillar, West Asia-North Africa Institute)
    Abstract: First, youth inactivity, unemployment and informal employment are pervasive in the MENA labour markets. Using microdata from Labor Market Panel Surveys, and ERF COVID-19 MENA Monitors for six MENA countries, workers’ employment statuses are assessed separately by age group and gender. Second, the social and solidarity economy (SSE) includes both for profit and non-profit entities, cooperatives, associations and mutual. Their legal frameworks and economic impact, especially in terms of employment and GDP contribution are surveyed. Third, personal savings and grants remain the major funding sources of SSEs, which face structural deficiencies in the banking system and lack tailored financial products that the microfinance industry should overcome. Four, formalisation policies encapsulate distinct strategies, targets and impact assessment, wherein which the SSE including microfinance institutions plays a role in formalising both informal businesses and employees, as well as triggering job creation.
    Date: 2022–11–20
  3. By: Imène Berguiga (University of Sousse, Tunisia); Philippe Adair (University Paris-Est Créteil)
    Abstract: Do female entrepreneurs in MENA countries face obstacles, either exogenous (discrimination) or endogenous (self-selection), in funding their businesses? Literature reviews provide controversial evidence thereof and, so far, very few papers tackled this funding issue for female entrepreneurs in MENA countries. A pooled sample of 6, 253 enterprises from the 2019/2020 World Bank Enterprise Surveys (WBES) including six MENA countries (Egypt, Morocco, Tunisia, Jordan, Lebanon, and Palestine) documents the financial behavior of both owners and managers according to gender. Two probit regression models address loan supply and loan demand with respect to discrimination versus self-selection. There is self-selection and discrimination against female owners but not discrimination against female managers. We provide a robustness test by estimating the models on a sub-sample of micro, small, and medium-sized enterprises. Sampling biases in the WBES, together with the characteristics of female clients of microfinance institutions, suggest that micro-entrepreneurs would have faced bank discrimination and self-selection obstacles. Hence, public authorities should support pooling loan guarantees in favor of female entrepreneurs (i.e., positive discrimination).
    Date: 2022–11–20
  4. By: Arthur Lewbel (Boston College); Xi Qu (Shanghai Jiao Tong University); Xun Tang (Rice University)
    Abstract: We propose an adjusted 2SLS estimator for social network models when some existing network links are missing from the sample (due, e.g., to recall errors by survey respondents, or lapses in data input). In the feasible structural form, missing links make all covariates endogenous and add a new source of correlation between the structural errors and endogenous peer outcomes (in addition to simultaneity), thus invalidating conventional estimators used in the literature. We resolve these issues by rescaling peer outcomes with estimates of missing rates and constructing instruments that exploit properties of the noisy network measures. We apply our method to study peer effects in household decisions to participate in a microfinance program in Indian villages. We find that ignoring missing links and applying conventional instruments would result in a sizeable upward bias in peer effect estimates.
    Keywords: social networks, 2SLS, missing links
    Date: 2022–12–20
  5. By: Úbeda, Fernando; Mendez, Alvaro; Forcadell, Francisco Javier
    Abstract: Lack of access to banking and financial services appreciably hinders development, particularly in the global South. For this reason, financial inclusion is a crucial objective of the Sustainable Development Goals. One main barrier to financial inclusion is the lack of trust in banking. From a sample of 40 developing countries and 82,724 individuals, we verify that multinational banks can increase trust in banking by incorporating sustainability criteria into their business model.
    Keywords: sustainable banking; finance inclusion; ESG criteria; trust in banking; multinational banks; SDGs
    JEL: F3 G3 N0
    Date: 2023
  6. By: Samar Abdelmageed (The British University in Egypt)
    Abstract: The main objective of this paper is to analyze the interrelationships between financial integration, inclusion, and stability in the Middle East and North Africa (MENA) region and the role of crises in these linkages. This is the first study attempting to examine the interrelations among these variables in MENA financial markets. To achieve its objective, the paper starts by assessing regional integration among MENA stock markets using correlational analysis and the DCC GARCH models. Then, it builds a PVAR model to examine the relationships between integration, inclusion, and stability in the MENA region. The results show that regional integration is still limited in the MENA region, despite growing linkages with other international markets. Regional integration in the MENA region is more pronounced among countries that lie within closer geographical proximities. Moreover, crises, whether financial or political, also tend to increase regional correlations and linkages among MENA markets, although the impact of financial crises is higher compared to that of political instabilities. The analysis highlighted the positive short-term impacts of regional integration on inclusion in the MENA region; however, these impacts could not be maintained for longer periods. In contrast, international integration had negative effects on inclusion and stability that diminished over time. No linkages were found between financial inclusion and stability in the MENA region
    Date: 2021–12–20

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