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on Microfinance |
| By: | Martinez Cuellar, Cristina; Tesliuc, Cornelia M.; Jaupart, Pascal Jean Edouard; Manigat, Ailo Klara |
| Abstract: | The Adaptive Social Protection for Increased Resilience project (ASPIRE or PSARA for itsacronym in French), financed by The World Bank and implemented by the government of Haiti, aims to design andimplement a cash transfer program for vulnerable households in Haiti, with a focus on increasing financial inclusion anddigitizing payments. This report analyzes the financial inclusion landscape of beneficiaries; identifies demand-sidebarriers to the uptake of Digital Financial Services (DFS); and provides recommendations for promoting the use of DFSamong beneficiaries and their communities. The findings of this report show that while access to formal financialservices is limited, there is more access and usage of mobile money and informal services through the VillageSavings and Loan Associations (VSLAs). The report recommends actions to remove barriers to DFS usage, such as creatingand promoting DFS use cases among beneficiaries, increasing trust and confidence in using e-wallets, working withpolicymakers to provide IDs for beneficiaries and with regulators to reduce Know Your Customer (KYC) on low-tieraccounts, and increasing mobile phone ownership. Additionally, the report suggests strategies to support arobust DFS ecosystem, including designing attractive products for low-income customers and building a sustainableCash-in and Cash-out agent network. |
| Date: | 2023–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:hdnspu:184762&r=mfd |
| By: | Anik Ashraf; Elizabeth Lyons |
| Abstract: | This paper investigates the complementarity between business training and access to financial capital for small and medium enterprises (SMEs) in Kenya. All participants in a business training program are offered training. One-third of participants are offered loans immediately after training (Concurrent Loan group), one-third are offered loans six weeks after training (Delayed Loan group), and the remaining third are offered loans after another four weeks (Control group). While a long time lag may reduce knowledge retention and application by SMEs, concurrent access to loans and associated business spending may crowd out the entrepreneurs’ attention from improving business practices. We find evidence for the latter in both intention-to-treat and treatment-on-the-treated estimates. While SMEs in both Control and Delayed Loan groups improve their business practices, SMEs in the Concurrent Loan group who take loans do not improve their practices at all. Moreover, entrepreneurs who take loans spend less time on their businesses and their business revenue falls. Our evidence is consistent with the entrepreneurs in our study using loans to substitute for their income. |
| Keywords: | business training, access to finance |
| JEL: | O12 L26 M53 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10612&r=mfd |
| By: | Gautam Kumar Biswas; Faruque Ahamed |
| Abstract: | The study analyzed the impact of financial inclusion on the effectiveness of monetary policy in developing countries. By using a panel data set of 10 developing countries during 2004-2020, the study revealed that the financial inclusion measured by the number of ATM per 100, 000 adults had a significant negative effect on monetary policy, whereas the other measure of financial inclusion i.e. the number of bank accounts per 100, 000 adults had a positive impact on monetary policy, which is not statistically significant. The study also revealed that foreign direct investment (FDI), lending rate and exchange rate had a positive impact on inflation, but only the effect of lending rate is statistically significant. Therefore, the governments of these countries should make necessary drives to increase the level of financial inclusion as it stabilizes the price level by reducing the inflation in the economy. |
| Date: | 2023–08 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2308.12542&r=mfd |
| By: | Allen N. Berger; Maryann P. Feldman; W. Scott Langford; Raluca Roman |
| Abstract: | Minority-owned banks have a mission to promote economic well-being in their communities. In particular, specialization in lending based on a central mechanism of shared-minority identity can yield an advantage in serving community needs through times of financial and economic crises. To test this proposition, we analyze individual banks in their local market context from 2006 to 2020. Results suggest minority-owned banks improve economic resilience in their communities during the global financial crisis (GFC) and the COVID-19 crisis through increased small business and household lending, but fewer benefits are found during other phases of the business cycle. Our results are robust and stand up to treatments of identification concerns, including propensity score matching (PSM) and instrumental variables (IV). Our results imply that if all U.S. banks behaved in a manner consistent with minority-owned banks through the GFC, at least 1.9 million more minority jobs would have been maintained and at least $50 billion more in credit would have been available to small businesses on an annual basis. These findings are consistent with predictions of the economic resilience literature but not those of the finance-growth nexus literature. |
| Keywords: | minority-owned banks; minority employment; community banking; crises; economic resilience; small business credit; household credit; shared-minority identity |
| JEL: | G01 G21 J15 J21 O12 |
| Date: | 2023–06–26 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:96382&r=mfd |
| By: | Daniel Gorin; Sarah Gosky; Michael Suher |
| Abstract: | Guidance is used by bank regulators to communicate supervisory expectations to both examiners and banks. In March 2020, in response to pandemic shut-downs, financial regulators issued a joint statement encouraging small-dollar lending to meet temporary cash-flow imbalances, unexpected expenses, or income short-falls. |
| Date: | 2023–07–28 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfn:96655&r=mfd |
| By: | Mr. Mario Catalan; Alexander W. Hoffmaister |
| Abstract: | Understanding how corporate bond market disruptions are transmitted to the rest of the financial system is essential to gauge systemic financial risk and design policy responses. In this study, we extend the vector autoregression model of Gilchrist and Zakrajšek (2012) to explicitly account for the role of commercial banks in the transmission of corporate bond credit spread shocks. We find that corporate bond market shocks can reduce commercial bank lending activity by tightening loan supply. Policies designed to contain stress in the corporate bond market can thus mitigate systemic risk by limiting contagion to the commercial banking sector. |
| Keywords: | excess bond premium; banks; VAR models; financial markets and the macroeconomy; systemic risk; contagion. |
| Date: | 2023–08–04 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2023/156&r=mfd |
| By: | Isabel Garrido (Banco de España); Irune Solera (Banco de España) |
| Abstract: | In the face of the COVID-19 crisis, the International Monetary Fund (IMF), other multilateral institutions and countries took unprecedented measures. Inter alia, the IMF agreed on an historical SDR allocation that more than tripled the volume of SDRs to cover long-term global reserve needs and ultimately support vulnerable countries. Member countries can keep SDRs to boost their reserves or use them in other ways, including to cancel their debts with the IMF, lend to the IMF or exchange SDRs for currencies. This document evaluates how members have used the 2021 SDR allocation. The findings show that most of the allocation has been used to increase reserves, although 40% of emerging economies and more than 60% of low-income countries have used SDRs to service their debts with the IMF or to exchange for currency, mainly for budgetary purposes in relation to social and health policies. Furthermore, in line with the G20’s objective to channel USD 100 bn of SDRs to countries in need, members with sound economic positions have voluntarily lent some of their SDRs to IMF trusts that finance vulnerable countries in affordable terms. |
| Keywords: | IMF, special drawing rights (SDRs), SDR allocation, liquidity, international cooperation |
| JEL: | F30 F33 O19 F02 |
| Date: | 2023–08 |
| URL: | http://d.repec.org/n?u=RePEc:bde:opaper:2318&r=mfd |
| By: | Holden, Stein T. (Centre for Land Tenure Studies, Norwegian University of Life Sciences); Tilahun, Mesfin (Centre for Land Tenure Studies, Norwegian University of Life Sciences) |
| Abstract: | Basic numeracy skills are obviously important for rational decisionmaking when agents are facing choices between risky prospects. Poor and vulnerable people with limited education and numeracy skills live in risky environments and have to make rational decisions in order to survive. How capable are they to understand and respond rationally to economists’ tools for the elicitation of risk preferences? Can we make designs that are simple enough for them to give rational responses that reveal their true preferences? And how much does variation in their limited numeracy skills contribute to decision errors and the estimated sizes of their risk preference parameters? Finally, we ask whether Expected Utility (EU) theory is sufficient or whether Rank Dependent Utility (RDU) does better in the analysis of decision errors and risk preferences in our context. We try to answer these research questions based on a large sample of rural youth business group members from Ethiopia based on two variants of a Certainty Equivalent - Multiple Choice List (CE-MCL) approach with 12 and 10 Choice Lists (CLs) per subject. Numeracy skill scores are constructed based on a math test with 15 contextualized questions. The experiment facilitates the estimation of structural models while separating the effects of numeracy skills on decision errors in a Fechner error specification that is a function of numeracy skills and experimental design characteristics. The structural models estimate alternatively Expected Utility (EU) and Rank Dependent Utility (RDU) models, the latter with two-parameter Prelec probability weighting functions.It allows us to assess whether limited numeracy skills are correlated with EU-type risk tolerance (utility curvature) and RDU-type of probabilistic risk tolerance in the form of probabilistic insensitivity and optimism/pessimism bias. We find that weak numeracy skills are associated with slightly less risk tolerance in EU models, with stronger probabilistic insensitivity in RDU models, and with more random noise (Fechner error) in both types of models. However, even the subjects with the weakest numeracy skills performed quite well in the simple CE-MCL experiments with the binary choice elicitation approach, indicating that it was capable of revealing the risk preferences of such subjects with very low numeracy skills as they produced only marginally more decision errors than subjects with better numeracy skills. |
| Keywords: | Numeracy skills; Risk preferences; Field experiment; Ethiopia |
| JEL: | C93 D81 |
| Date: | 2023–09–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nlsclt:2023_005&r=mfd |
| By: | Fairlie, Robert W. (University of California, Los Angeles) |
| Abstract: | Many small businesses closed in the pandemic, but were economic losses disproportionately felt by businesses owned by people of color? This paper provides the first study of the impacts of COVID-19 on racial inequality in business earnings. Pandemic-induced losses to business earnings in 2020 were 16-19 percent for all business owners. Racial inequality increased in the pandemic: Black business owners experienced larger negative impacts on business earnings of 12-14 percent relative to white business owners. Regression estimates for Latinx and Asian business owners reveal negative point estimates but the estimates are not statistically significant. Using Blinder-Oaxaca decompositions and a new pandemic-focused decomposition technique, I find that the industry concentrations of Black, Latinx, and Asian business owners placed each of these groups at a higher risk of experiencing disproportionate business earnings losses in the pandemic. Higher education levels among Asian business owners helped insulate them from larger losses from COVID-19. In the following year of economic recovery, 2021, business earnings rebounded strongly for all groups except for Asian business owners who experienced large relative losses (which were partly due to industry concentrations). State-level variation in policies and disease spread does not explain racial differences in business earnings losses or rebounds. |
| Keywords: | entrepreneurship, COVID-19, racial inequality, business earnings, pandemic |
| JEL: | L26 J15 |
| Date: | 2023–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16412&r=mfd |