nep-mfd New Economics Papers
on Microfinance
Issue of 2023‒02‒06
three papers chosen by
Rachita Gulati
IIT Roorkee

  1. Financial inclusion, mobile money and regulatory architecture By Metzger, Martina; Were, Maureen; Pédussel Wu, Jennifer
  2. Financial Services for Poor Farmers in Thailand: The Case of the Bank for Agriculture and Agricultural Cooperatives (BAAC) By Mokbul Morshed Ahmad; Nguyen The Manh
  3. The financial behavior of households in the face of climate change By Nandrasa, Tiava

  1. By: Metzger, Martina; Were, Maureen; Pédussel Wu, Jennifer
    Abstract: This paper discusses first the role of mobile money accounts to enhance financial inclusion towards vulnerable groups in developing countries in the light of recent empirical evidence. Second, we explore the role of regulation to address risks to consumers and the financial system arising from the use of mobile money accounts, a question which has not been thoroughly addressed in the literature. Although financial inclusion via mobile money accounts is increasing, the outreach to particular disadvantaged and poor groups is still limited. However, remittances and G2P payments might develop into game changers for financial inclusion of poor and vulnerable households. Many countries from Sub-Saharan Africa are outperformers in terms of use of mobile money accounts in comparison to developing countries in other regions. Strikingly, the empirical evidence suggests that the regulatory landscape was of strategic importance to unleash the developmental potential of mobile money networks and the crowding-in of formerly unbanked households. Regulation on consumer protection particularly is of strategic relevance for the lasting acceptance and smooth operation of mobile money services and sharing the benefits with disadvantaged and poor households. A lack of effective and convincing consumer safeguards in place could diminish the trust in mobile money services and subsequently their acceptance and use. As mobile money services involve similar risks as traditional banking services, similar rules should apply. In addition, there are risks arising from the particular technology for mobile money account holders and institutions of the financial sector, including DFS providers. To these risks belong hysteresis effects to the disadvantage of poor households due to the use of alternative data and biased algorithms as well as displacement effects in local traditional and digital financial services due to BigTech.
    Keywords: Mobile money, financial inclusion, regulation, consumer protection, digital financial services, Big Data, Sub-Saharan Africa
    JEL: D18 G18 G23 G51 G59
    Date: 2022
  2. By: Mokbul Morshed Ahmad; Nguyen The Manh
    Abstract: Lack of credit for farming is one of the main obstacles that poor Thai farmers face. Most agricultural credits from commercial banks are given to large agricultural businesses thus leaving out poor farmers who consequently have to borrow from informal sources with high interest rates. The Bank for Agriculture and Agricultural Cooperatives (BAAC), founded in 1966, provides financial assistance and development support for farmers, small business owners and community organizations in rural areas. Its mission is to alleviate farmers’ difficulties caused by debt obligations and low commodity prices and its major achievement is the informal loan reduction. However, BAAC faces some problems, including poor service quality, limited number of service locations that cause lack of access to the poor, populist policies, corruption by politicians, increasing number of non-performing loan. The major suggestions to address these problems are to enhance professional management of the bank, making it more accessible to poor farmers particularly in the remote and disadvantaged areas of the country. The results of this paper are drawn based on secondary data and interviews with some senior bank managers and experts.
    Keywords: Credit, Poor farmers, Bank for Agriculture and Agricultural Cooperatives, Financial services, Thailand
    JEL: G01 G21 G32
    Date: 2022
  3. By: Nandrasa, Tiava (University of Toliara)
    Abstract: Climate change is requiring behavioral changes in finance. Households that are most impacted by climate change are adopting a financial resilience strategy to cushion the climate shock. Tontine, access to MFIs and VOAMAMI are the preferred ways for vulnerable households to cope. This article first outlines the resilience capacity of households and provides an analysis of the change in behavior of Malagasy households to mitigate the effects of climate change. Keywords: Climate change, Behavior, Tontine, VOAMAMI
    Date: 2022–02–13

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