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on Microfinance |
| By: | Quaicoe, Nana |
| Abstract: | In economies where a portion of the population transacts through mobile money and the other portion strictly uses only cash, can any single interest rate rule serve both groups well? I develop a two-agent New Keynesian model calibrated to Ghana in which included households manage liquidity through mobile money under Baumol– Tobin demand, while excluded households depend on government transfers under fiscal dominance. I find a critical threshold at approximately 70 percent financial exclusion.Below it, aggressive inflation targeting is optimal for both household types. Above it, the welfare surface for included households develops an interior optimum, the optimal Taylor rule diverges across groups, and no single rule resolves the conflict. The distributional cost of monetary policy is convex in exclusion: the welfare variance ratio between household types rises from 7.6:1 at 50 percent exclusion to 98:1 at 80 per- cent, the range observed across Sub-Saharan Africa. Aggregate welfare statistics mask this entirely. The trade-off is reducible only through financial inclusion, not through monetary policy design. |
| Keywords: | monetary policy, financial inclusion, mobile money, TANK model, fiscal dominance, Taylor rule, distributional effects, Sub-Saharan Africa |
| JEL: | E52 E58 G23 O16 |
| Date: | 2026–04–18 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:128793 |
| By: | Worarit Vannavanit; Sommarat Chantarat; Lathaporn Ratanavararak; Kazushi Takahashi |
| Abstract: | This paper evaluates a flexible debt relief program that combines traditional debt forbearance with “principal-first†repayment incentive – whereby the very first baht of loan repayment during the program goes towards principal reduction. Using loan-level data from the National Credit Bureau and a fuzzy regression discontinuity design, we find that while the built-in forbearance reduces overall repayment probability, 49% of program participants maintain repayment. In addition, the principal-first feature successfully increases repayment intensity at the cutoff among those who make meaningful repayments. At the same time, the program significantly mitigates credit deterioration and generates positive spillovers, prompting borrowers to reallocate freed-up liquidity toward non-relief loans with stricter enforcement. These findings demonstrate that embedding repayment incentives within debt forbearance introduces contract flexibility that effectively reveals borrowers’ latent repayment capacity. This allows the design to function simultaneously as a critical safety net for financially distressed borrowers and an active incentive for capable borrowers to accelerate debt reduction. |
| Keywords: | Flexible contract; Debt relief; Debt restructuring; Farmer debt; Household debt |
| JEL: | D90 G21 G50 G51 Q14 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:pui:dpaper:253 |
| By: | Mavuma, David; Kahambwe, Chris |
| Abstract: | This study examines the potential effects of transaction costs associated with electronic payments in foreign currency on household purchasing power in the Democratic Republic of the Congo within the framework of the reform proposed by the Central Bank of Congo. Using a transaction cost analysis and simulations based on the tariff structures of major Mobile Money operators, the findings suggest that transaction fees may increase the effective cost of goods and services and reduce consumers’ purchasing power. In a context characterized by poverty, low banking penetration, and a large informal sector, the study highlights the need for appropriate regulatory and inclusion measures to protect vulnerable populations and ensure the achievement of the reform’s financial traceability objectives. |
| Keywords: | Transaction Costs; Mobile Money; Purchasing Power; Payment Reform; Financial Inclusion; Democratic Republic of Congo. |
| JEL: | E42 G21 L81 O16 |
| Date: | 2026–05–24 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:129279 |