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on Microfinance |
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Issue of 2025–01–13
three papers chosen by Marco Novarese, Università degli Studi del Piemonte Orientale |
| By: | Masselus, Lise; Petrik, Christina; Ankel-Peters, Jörg |
| Abstract: | Our paper examines construct validity, an often neglected yet important element affecting the generalizability of individual study results. Construct validity deals with how the operationalization of a treatment corresponds to the broader construct it intends to speak to. The universe of potential operationalizations is referred to as the design space. As an empirical example, we systematically review 45 microfinance Randomized Controlled Trials to estimate the size of the design space. Variations in the treatment operationalization matter for the observed effect. We also show that most papers generalize from the operationalized treatment to a broad construct, mostly without acknowledging underlying assumptions. |
| Keywords: | causal inference, generalizability, meta-science, microfinance, systematic review |
| JEL: | A11 C18 C93 D04 O12 O16 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:i4rdps:184 |
| By: | Mehdi Mahmoudi (University of Orleans); Nicolae-Bogdan Ianc (University of Orleans & West University of Timisoara) |
| Abstract: | This paper explores the relationship between microfinance and economic development using a cross-country dataset of 60 developing countries from 2000-2018. We employ the Panel VAR model, estimated by the generalised method of moments (GMM). Microfinance institutions (MFIs) indicators are categorised into social and financial performance variables. Social performance variables include the number of clients served (NOB) and the percentage of women borrowers (PFB), while financial performance indicators consist of the portfolio at risk (PAR), operational self-sufficiency (OSS), and operating expenses (OPX). Economic development is assessed using the Human Development Index (HDI), which integrates economic indicators like Gross National Income per capita (GNI) with social indicators such as educational attainment (EDI) and life expectancy at birth (LE). We perform a Granger causality test confirming a Granger causal relationship between microfinance and economic development. Our findings indicate that shocks to social performance variables positively influence economic development, and shocks to financial performance variables significantly impact the human development index. |
| Keywords: | Microfinance, economic development, Granger causality, panel VAR, HDI |
| JEL: | F |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:inf:wpaper:2025.1 |
| By: | Bernardus Van Doornik; Armando Gomes; David Schoenherr; Janis Skrastins |
| Abstract: | In this paper, we present a Savings-and-Credit Contract (SCC) design that mandates a savings period with a default penalty before providing credit. We demonstrate that SCCs mitigate adverse selection and can outperform traditional loan contracts amidst information frictions, thereby expanding access to credit. Empirical evidence from a financial product incorporating an SCC design supports our theory. While appearing riskier on observables, we observe lower realized default rates for product participants than for bank borrowers. Further consistent with the theory, a reform that reduces the default penalty during the savings period induces worse selection and higher realized default rates. |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:bcb:wpaper:610 |