No full-text available
To read the full-text of this research,
you can request a copy directly from the author.
Does Microfinance Really Help The Poor? Evidence from Flagship Programs in Bangladesh
Abstract
The microfinance movement has built on innovations in financial intermediation that reduce the costs and risks of lending to poor households. Replications of the movement's flagship, the Grameen Bank of Bangladesh, have now spread around the world. While programs aim to bring social and economic benefits to clients, few attempts have been made to quantify benefits rigorously. This paper draws on a new cross-sectional survey of nearly 1800 households, some of which are served by the Grameen Bank and two similar programs, and some of which have no access to programs. Households that are eligible to borrow and have access to the programs do not have notably higher consumption levels than control households, and, for the most part, their children are no more likely to be in school. Men also tend to work harder, and women less. More favorably, relative to controls, households eligible for programs have substantially (and significantly) lower variation in consumption and labor supply across ...
... Este tipo de mecanismos son entendidos como "mecanismos de reducción del riesgo financiero" (Cf. Morduch, 1999;Nissanke, 2002;Stiglitz, 2005). Dado que los microcréditos son destinados a personas en situación de pobreza que no pueden ofrecer garantías prendarias, la metodología Grameen está en función de codificar, como si fueran guías de procedimiento, las formas más adecuadas de producir beneficios y evitar pérdidas para el microbanco. ...
... En la metodología Grameen, los grupos tienen una funcionalidad que permite transferir los costos de las operaciones de crédito hacia los prestatarios (Cf. Morduch, 1999). Específicamente, aquellos costos que refieren a la determinación del riesgo de las operaciones crediticias que, dada la ausencia de mecanismos objetivos para determinarlo y dada la falta de garantías prendarias que el prestatario pueda ofrecer, resultaría en costos considerados altos por cualquier banquero o prestamista. ...
... Otros criterios refieren a la forma que adopta la garantía, a los montos que se entregan y a la forma de devolverlos (Cf. Morduch, 1998Morduch, y 1999Goldberg, 2006;Bekerman y Rodriguez, 2007;Santos, 2007). ...
La metodología Grameen de microcréditos con garantía solidaria es aplicada por una gran diversidad de instituciones alrededor del mundo para “luchar contra la pobreza”. Como producto de un largo proceso de creación y difusión a escala internacional impulsado por los organismos multilaterales de financiamiento, es considerada actualmente en términos de una herramienta de “empoderamiento” y “liberación”.Habiendo sido desarrollada bajo la consigna del “fracaso del Estado” en la reducción de la pobreza, la modalidad Grameen de microcréditos se presenta a sí misma como una opción “viable” y “de mercado”. En la Argentina, fue incorporada como fundamento de una política social del Ministerio de Desarrollo Social de la Nación, aunque invirtiendo su relación fundamental: es “el Estado” el que debería paliar los “fracasos del mercado”. En este marco, el libro de Adrián Koberwein aporta al análisis de las relaciones sociales involucradas en la implementación de este tipo de microcréditos. Dichas relaciones se constituyen, según el autor, a partir de la articulación entre diferentes lógicas de producción y circulación de valor: una relativa a las microfinanzas, otra a las políticas sociales, y una tercera a las relaciones personalizadas. Dichas relaciones se constituyen, según el autor, a partir de la articulación entre diferentes lógicas de producción y circulación de valor: una relativa a las microfinanzas, otra a las políticas sociales, y una tercera a las relaciones personalizadas.
... Some studies have celebrated the positive influence of microfinance programs on impoverished populations (Miller and Martinez, 2006;Stephens and Tazi, 2006;Hossain, 1984;Hossain, 1988;Akter, 1996;Hashemi et al., 1996;Humal and Mosley, 1996;Khandker and Chowdhury, 1996;Ghosh, 1997;Khandker, 1998;Islam, 1999 Pitt et al., 2003). Conversely, other studies have raised questions about the efficacy of microcredit programs, with some even suggesting negative consequences (Copestake et al., 2001;Morduch, 1998;Dugger, 2004;Coleman, 2001). In Bangladesh's rural areas, many NGOs, and Micro Finance Institutes (MFIs) provide microcredit programs. ...
... Conversely, critics point to the potential pitfalls of microcredit, particularly when it is not properly structured or regulated. Concerns include high interest rates that can lead to indebtedness (Copestake et al., 2001;Morduch, 1998) and the limited impact on poverty reduction when funds are mismanaged or used for non-productive purposes (Dugger, 2004;Coleman, 2001). These conflicting viewpoints underscore the need for a systematic analysis of microcredit programs to determine their true impact on poverty alleviation. ...
The main purpose of this research is to evaluate microcredit program of selected leading NGOs in Bangladesh. Interviews were conducted with 1000 individuals from the chosen NGOs and MFIs that run microcredit programs in Bangladesh. According to data analysis, people who received loans between 21,000/- and 30,000/- taka had a 6.289-times greater chance of living in poverty than people who received loans between 5,000/- and 30,000/- taka. This loan amount, between 21,000/- and 30,000/- taka, is adequate for any small business. However, a loan of between 5,000/- and 10,000/- taka is too tiny for any type of sustainable business. This amount of financing just serves to boost family consumption and has no impact on the business' ability to change. Significant effects on reducing poverty are hard by many groups in the study. The likelihood of living in poverty rises by 14.3 percent and 21.0 percent, respectively, depending on whether the respondents are members of BURO and ASA. If the respondents in TMSS Bangladesh are worried, there is an enhanced possibility of up to 11.8 percent points in the absence of a change in poverty. The likelihood of respondents experiencing no change in their poverty position is significantly reduced if the respondent is from Great Britain (5.4 percent). The likelihood that respondents will marginally escape poverty rises if they are interested in BURO (8.2%), GB (2.5%), ASA (10.4%), and TMSS (0.2 percent). This survey report and analysis demonstrate that there has been no progress in the possibility of a good shift in poverty. Analyzing to a logit regression analysis, the size of the loan obtained, experience with eradicating poverty, and NGO participation are three key factors that influence how satisfied a user is with a microcredit program. The results demonstrate that many non-governmental organizations (NGOs) have no discernible influence on reducing poverty. It demonstrates that the respondents' experiences of reducing poverty are the same. A respondent's level of poverty may be adjusted if they received enough credit, had good supervision, and used their credit productively. However, research shows that TMSS respondents are 10.92 times more likely than BRAC respondents to experience a reduction in poverty.
... Dichter (2007) established that microfinance funding was primarily utilized for debts and consumption, rather than for real income-generating activities. Copestake et al. (2002) and Morduch (1998) also discovered that a dependency on microfinancing will result in an excessive workload and contribute to domestic violence against women, which will, in turn, impede women empowerment. Overall, no conclusive evidence exists showing the empowerment of women by microfinance institutions. ...
... Previous studies investigating the relationship between microfinance and female empowerment in Bangladesh, such as Hashemi et al. (1996), Morduch (1998), Khandker (2005), and A. Islam et al. (2015), were quantitative in nature, and, therefore, could not capture the experiences and perceptions of the female borrowers. This study, however, explores how microfinancing and the demographic factors of female borrowers influence women's empowerment by analyzing the experiences and perceptions of actual female borrowers in Bangladesh. ...
The role played by microfinancing in the empowerment of women has been a subject of debate in recent literature. By employing the case study method, this paper explores the influencing determinants. Data was obtained from a field interview comprised of 20 female microfinance borrowers and their male family members, as well as focus group discussions and participant observation. The economic, social, and political empowerment of the interviewed women were assessed using Kabeer’s empowerment framework, and the results reveal that microfinancing does not influence the economic and political dimensions of female empowerment; instead, microfinancing was observed to empower women socially, particularly with respect to their participation in major decision-making. The results further indicate that the age, family type, educational level, financial literacy, and training of female microfinance clients play important roles in their empowerment.
... In cases of non-random programme placement and participation, DID method of impact evaluation is found to be more useful in comparison to instrumental variable regression and regression discontinuity which has also been emphasized in the impact evaluation of microcredit programmes (Morduch, 1988). The DID approach allows us to avoid the impact of selection bias as we compare the difference of the outcome variables between the 'before' ...
... We estimated the following empirical model (Morduch, 1988): ...
Instant and low-cost access to digital microcredit attracts millions of borrowers. Using household panel data, we study the impacts of digital microcredit on poverty in Kenya and compare the impact with traditional microcredit. We employ difference-in-differences and propensity score matching methods and find significant negative impacts of digital loans on poverty but do not find any significant impacts of the traditional microcredit on poverty. Results indicate that relatively better-off households have access to digital loans compared to traditional microcredit. We emphasize the policy on regulation and behavioural tools that might help to reduce the welfare-deteriorating impact of digital microcredit.
... Econometric results indicate that for bigger families, a chance to reduce to poverty is lower. This finding correlates with earlier studies of Lewis (1954) and Morduch (1998) who revealed that bigger families could earn and accumulate more money and thus could be safe enough from entering poverty. Conversely, Cao et al. (2016) found many factors that could affect the reduction of big households to poverty. ...
... The results correlate with those obtained earlier by Jiang and Yan (2006), who indicated that with the help of loans, farmers could increase output and productivity. At the same time, this view contradicts Morduch (1998), who believed that the impact of microfinance on poverty reduction was long term. Liao (2004) also found that money borrowed from the private sector on low-interest rates helped farmers to increase their income temporarily and had no significant relationships with the alleviation of poverty in the long run. ...
Poverty alleviation policies could affect occupation transition, but in many rural communities, the determinants of such processes have remained unclear. In Pakistan, government policies have been failing to achieve the desired poverty alleviation goal, but no study has so far unambiguously identified causal linkages between government interventions and livelihood choices of rural residents. In this paper, the authors attempt to shed light on the policy-poverty-sustainability trilemma pattern by revealing the reactions on poverty reduction measures in three rural districts of Southern Punjab state of Pakistan. 240 farmers and household heads were surveyed and grouped into the poor, middle, and upper-middle categories based on their attitude to the parameters of social, human, financial, physical, and natural capital. A multinomial logit method was employed to identify the factors of livelihood choice in each category. Among the poorest households, safety net policies demonstrated the most distinct anti-poverty effect. In the middle category, livelihood choice was adversely affected by drought, but positively by medical expenses, educational level, and family size. The availability of agricultural machinery, training programs, and loans had positive effects on livelihood choices in the upper-middle category. The variability of causal links between poverty alleviation forcers and actual livelihood behavior requires diversified anti-poverty interventions, suggested by the authors.
... Abundant evidence substantiates the beneficial influence of microfinance on diverse facets of rural development. Research conducted in Bangladesh by Khandker and Khalily (2001), Pitt and Khandker (1998), and Morduch (1998) emphasize the beneficial impact on reducing poverty, improving children's education, and empowering women, respectively. Research conducted in India by Rutherford and Sriram (2010), Banerjee et al. (2015), and Kabeer and Mahmud (2004) demonstrates favorable results in terms of increased income, enhanced women's empowerment, and the creation of employment opportunities. ...
... The loophole of the institutionalist approach is that it considers customers or micro entrepreneurs very close to the poverty line ($ 2 per day) whose interest rates are high enough to ensure the financial autonomy of banking institutions. A tradeoff between targeting the poor and profitability at the same time by banking institutions (Morduch, 1998) termed "microfinance schism". The significance of the institutionalist approach is grounded on the fact depository financial institution focus is to set up a system of financial intermediation durably and especially dedicated to the poor. ...
Purpose: The study sought to investigate the effect of financial innovations on financial performance of depository financial institutions in Cameroon. The specif objectives of the study were to examine the effect of product, process and institutional innovation on the financial performance of financial institutions Methodology: The study adopted a cross sectional research design. Purposive and convenience sampling methods were used to select 210 respondents from 75 financial institutions in Cameroon. Primary data was collected using a self-administered questionnaire. Data collected was sorted, coded and analyzed using the Statistical Package for Social Sciences (SPSS v22.0). Data collected was analysed descriptively with the use of mean and inferentially with the use of ordered logit regression model and Pearson correlation metrix to establish the relationship between the dependent variable and the independent variables and the results were presented in tables. Findings: The findings show that increased financial innovation through process and institutional innovation can increase financial performances. For the basic regression used to find banks’ performance, the analysis indicates that process and product innovation, measured by the ATM, POS, mobile banking and credit card, significantly influences financial performance of financial institutions. Although there is no significant effect of institutional innovation on financial performance, there is still a positive effect. Unique Contribution to Theory, Policy and Practice: The study therefore recommended that further study can be carried out on the effect of financial innovation on performance of depository financial institutions using different methods. In addition, depository financial institutions should transform banking service by adapting to process innovation so as to increase access to financial services.
... Khandker (2005) reported two significant results in Bangladesh: microfinance contribute to a rise in consumer spending, in particular if the borrower is an extremely poor person; poor women obtain a greater benefit from microfinance than those who are only moderately poor. However, the evidence provided by Morduch (1998), Hoque (2004, and Nghiem et al. (2012) suggest that microfinance has negligible effects on consumption. Several studies have concluded that the insignificant effect is either due to the low value of microcredit or the nonuse of microcredits for productive purposes. ...
The main objective of this article is to investigate the effects of microfinance on poverty alleviation and improving living standards of poor households in Tunisia. To the best of our knowledge, this is the first study that analyzes such topics in the Tunisian context. We employed Logistic regressions (both binomial and ordered logit) and Fuzzy‐set qualitative comparative analysis (fsQCA) to examine the consequences of microfinance usage. Based on complexity theory, fsQCA contributes to the literature by generating a richer understanding of complex poverty phenomena. Overall, we find a positive and significant relationship between the amount of microcredit an individual receives and the improvement of the living standards of beneficiaries. The improvements mainly relate to increased income, improved health care, and more consistent attendance at school. This study shows the potential for microfinance to reduce poverty in Tunisia, especially in the period following the Arab spring.
... Several studies (Morduch 1998;Todd 1996) confirm that poor agriculture-based households' access to microfinance programs is associated with substantially lower variation in labor supply and consumption across seasons. Moreover, many borrowers were found to be using loans to purchase land rather than completing their projects; the positive effects of which would reveal strong impacts given more time. ...
INTRODUCTION Women frequently suffer various forms of social exclusions and remain more isolated from opportunities toward advancement than men. Hence, the goal of any development project is to improve the condition of people's lives. However, it has been observed that socially determined disparity, conventional power relations between men and women, and mostly, the dominant patriarchic nature of society repeatedly disregards women's rights and therefore affect their roles, quality and behavior within all levels of society. A UNESCO (2005, pg. 1) report claims that "if poverty is to be seen as a denial of human rights, it should be recognized that women amongst the poor, bear doubly from the denial of their human rights-first in terms of gender inequality, and second in terms of poverty". Thus, there remains serious concerns over whether development programs fail to promote the status of men and women in the same ways. Asian Development Perspectives ADP ORIGINAL ARTICLE Asian Development Perspectives 2018;9(1):35-50 pISSN 2635-4659, eISSN 2636-4683 https://doi. In a country like Bangladesh, poverty alleviation is one of the prime concerns of any development plan, where equality and considerable equity needs to be ensured. Women make up nearly half of the population of the country, but they, especially from the poverty-stricken groups, are more vulnerable in terms of denial of fundamental human rights. Microfinance, as a development program, primarily targets the poorer female clients. From a development perspective, it could be anticipated that provision of financial resources and effective utilization of those resources along with group-based activities can strengthen women's economic roles. In due course, it is also anticipated that it may empower women and reduce inequality. This paper attempts to assess the effectiveness of one special microcredit program (PRIME) in promoting women's life living in a poverty-stricken area of rural Bangladesh. Taking into consideration the existing complex and conflicting results from the other studies , a total of 54 items have been gathered to address ten empowerment indicators. In order to generate an aggregate index for women empowerment, a popular Item Response Theory (IRT) model namely, the Rasch test for dichotomous responses has been used, which was previously undertaken by a revealing study conducted by Pitt, Khandker and Cartwright (2006). Results remain steady with the view that there is a significant positive association between microcredit and women empowerment.
... There are many arguments on microfinance and the result has been an immense debates and inconsistent. Morduch(1998) argues that access to credit assists poor to smooth their income and consumption. Khandker (2005) also emphasizes that microcredit reduces the poverty among poor by increasing consumption and growing income. ...
... MFIs fill this gap by providing diversified and customized small financial services specifically for underprivileged households. As Morduch [87] defines, MFIs are financial institutions dedicated to serving those excluded from the formal financial system. ...
This study aims to consolidate the available knowledge on gender diversity and its impact on the dual performance (social and financial) of Microfinance Institutions (MFIs). We specifically focus on MFIs due to their distinctive nature compared to other industries, being traditionally women-centered and having a substantial representation of women employees across all levels of the corporate hierarchy. To conduct this comprehensive analysis, we employed a systematic review approach, meticulously selecting 24 relevant papers from the Scopus and Web of Science databases. Our findings revealed that research on gender diversity in MFIs primarily focuses on the board level. However, existing studies present conflicting results, suggesting that the impact of gender diversity on MFI performance is nuanced and complex. This complexity stems largely from the varying roles women play within the organizational structure. Furthermore, our analysis highlights the influence of additional factors, such as the database used, the study's context, and its geographic location, on the reported outcomes. Notably, research on gender diversity at the managerial and loan officer levels remains scarce, presenting a significant gap in the current body of knowledge. To further illuminate this field, this study identifies the most influential papers on the topic of gender diversity in microfinance. Additionally, we provide a co-authorship network analysis, visualizing the connections between existing research. This analysis provides valuable insights and inspiration for future research endeavors in this critical area.
... By using microcredit, clients increase their income by the way of starting a new business, expanding their existing business or by utilizing the loan amount for any productive purpose, so that the income of the clients increases. Morduch (1999) concluded that the development in microfinance industry is based on a strong assumption that the poor have the potential and ability to implement income generating activities and can improve their standard of living, but they cannot do so because of lack of access to credit, savings and insurance facilities. Coleman (2006) argued that it is the size of the loans that households were able to acquire that was very important in determining the impact of those loans in household incomes. ...
This study endeavored to assess the socio-economic impacts of the micro-finance services of Fundacion Grameen Pilipinas (FGP) among women entrepreneurs of Bobon, Northern Samar, Philippines. It utilized a descriptive survey method, which involved 37 member beneficiaries as respondents. A survey was conducted, and the data derived have been tabulated and analyzed through frequency counts, percentages, weighted mean, using the Statistical package for Social Science (SPSS) software. Statistical analysis indicated that the amount of loan had significant relationship with income but did not show any relationships with other economic and social indicators. The mode of payments had significant relationships with income, savings, and access to education. The purpose of the loan has proven its significant relationship with savings and self-empowerment; while the terms of loan had significant relationship with income, savings, and self-empowerment. The loans utilized for small businesses proved to be significantly related to income, savings, asset acquisition and self-empowerment. Loans used to finance food processing ventures proved to have no significant relationships with both economic and social indicators. Loans used for handicraft manufacturing businesses proved to be significantly related to income, savings, and asset acquisition, while the loans utilized for backyard piggery proved to be significantly related to income.
... Desde então, uma extensa literatura internacional passou a apresentar avaliações de programas de microcrédito pelo mundo, com foco em suas estratégias metodológicas para atuação em localidades com alta incidência de pobreza. Boa parte deles apontavam para resultados positivos, sobretudo em termos de aumento e estabilidade do consumo, melhorias em indicadores de saúde, nutrição e educação, ou mesmo na capacidade produtiva das famílias tomadoras de empréstimos MOSTLE, 1996;MORDUCH, 1998). Nesse sentido, pode-se dizer que não há consenso sobre os efeitos dos programas de microcrédito, pois eles representam, na prática, uma grande diversidade de arranjos institucionais e modelos operacionais. ...
Este estudo visa contribuir com esse esforço avaliativo sobre o Pronaf a partir de uma estratégia operacional e de um recorte espacial específico. Trata-se do Programa Agroamigo, desenvolvido pelo Banco do Nordeste do Brasil (BNB) desde 2005 para executar a linha de microcrédito rural do Pronaf B – voltado à parcela de menor renda entre os agricultores familiares. O objetivo foi avaliar efeitos do Agroamigo a partir de duas dimensões agregadas – sobre o potencial de inclusão financeira e sobre a dinâmica econômica municipal. O foco territorial escolhido refere-se aos municípios de Minas Gerais em geral, acompanhados pelo programa, e mais especificamente por aqueles que compõem a mesorregião do Vale do Jequitinhonha. Ao final, foi possível aceitar a hipótese adotada de que os créditos anuais agregados desses financiamentos, além de aumentarem o potencial de atendimento do programa, estão associados a efeitos positivos em territórios rurais com baixa dinamicidade econômica, na medida em que se configuram como importante injeção monetária para esses municípios.
... Com base nos axiomas propostos, muitos têm sido os trabalhos na literatura que propõem novas formas de mensurar a pobreza. (FOSTER;GREER;THORBECKE, 1984;SEN, 1979;WATTS, 1968;MORDUCH, 1998). Feitas essas observações a 2 As distintas abordagens de medição de pobreza e bem-estar dividem-se em "bem-estarista" e "não-bem-estaristas". Os "bemestaristas" têm como base a comparação do bem-estar individual a partir dos níveis de utilidades obtidos a partir da renda ou consumo. ...
Desenvolve um novo método para decompor a variação da pobreza, considerando os seus principais fatores determinantes apontados na literatura, que possibilita uma investigação robusta, com embasamento teórico, das causas da variação da pobreza, sendo aplicável em contextos bastante gerais. Faz uma breve explanação de algumas das técnicas de decomposição da pobreza já existentes na literatura e destac as vantagens da metodologia proposta, frente às demais. Utiliza dados das unidades federativas brasileiras durante o período 2001-2009. Os resultados obtidos apontam que, na maioria dos estados, o efeito crescimento dominou os demais em termos de explicação da queda da pobreza durante o período estudados em alguns estados, o efeito distribuição também teve bastante importância nesse processo, seguido do efeito tendência; e, em geral, observou-se pouca relevância dos demais fatores (resíduos) na explicação da redução da pobreza no Brasil.
... The poverty reduction effect of micro-credit for poverty alleviation in developing countries has been an important part of academic research, and, currently, more urgent Additionally, some studies have shown that the impact of micro-credit for poverty alleviation varied by income group, and that this program benefited more the moderately poor compared to the hardcore poor [33,34]. The use of micro-credit for poverty alleviation deviates from its target and thus weakens its effect on poverty alleviation. ...
Micro-credit for poverty alleviation is an important financial measure of targeted poverty reduction and rural revitalization in China. This paper employs the OLS model and Logit model to empirically test the effect of micro-credit for poverty alleviation on the income level and stability of income growth of farmers based on the field survey data of 458 registered poverty-stricken farmer households in Fuping County and Quyang County of Hebei Province. The results suggest that micro-credit for poverty alleviation can increase farmers’ income, stabilize the growth of their income, and exert significant short-term and long-term effects on income growth and poverty alleviation. The specialized farmer cooperatives, the scale of production and operation, the proportion of family labor force, and the education level of the head of the farmer’s household exert a significantly positive effect on the farmers’ income and the stable growth of their income. There is a significant interaction between micro-credit for poverty alleviation and specialized farmer cooperatives. The physical conditions of family members exert a negative effect on the stable growth of their income, and other financing channels have no significant effect.
... There are many arguments on microfinance and the result has been an immense debates and inconsistent. Morduch(1998) argues that access to credit assists poor to smooth their income and consumption. Khandker (2005) also emphasizes that microcredit reduces the poverty among poor by increasing consumption and growing income. ...
... In this section, the paper focuses on assessing the difference in the values of key variables between different groups of households. Appropriate comparison between the experimental group and the control group needs to be made because "simple comparisons appear to be driven entirely by selection biases" (Morduch, 1998). ...
This study investigates the relationship between microfinance programs' presence and farmers' welfare and the factors influencing financial demand of rural households. Empirical analysis has been conducted to investigate the detailed impacts that microfinance programs imposed on rural households based on the data collected through surveys. This study provides evidence that support the hypothesis that microfinance leads to increase in borrowers’ household income.
... A significant percentage as reflected above also indicated an ability to diversify dietary needs as a result of access to microcredit. The findings collaborate with studies conducted by (Zeller et al., 2001& Morduch, 1998 which showed that access to credit had a significant and strong effect on income generation as it improved income levels during unfavorable seasons. Implying that there was a positive link between access to credit and welfare. ...
The study assessed the role of NGOs in enhancing food Security in Pibor County with specific reference to the Association of Christian Resources Organizations Serving South Sudan (ACROSS). The study aimed to establish the status of food security in Pibor County, to investigate the contributions of food aid to food availability, and to examine the contribution of microcredit to food access in Pibor County. The study adopted a descriptive survey research design, utilizing both quantitative and qualitative methods of data collection and analysis. Based on the population census report of 2008, a study population was established against which 10% of the accessible population was considered to yield a sample of 120 respondents obtained using both simple random and purposive sampling techniques. Surveys, interviews, and observation constituted the main methods of data collection. Data were analyzed using Microsoft Excel, as well as the content analysis method. The study established that 50% of households in Pibor County were marginally food secure and the rest were food insecure with varying levels of food insecurity. This implies that the ACROSS's interventions had not yielded significant results for food security in Pibor County. It was also established that 54.2% of households enhanced their food availability and household meal frequency with the help of food aid, thus, improving their nutritional statuses. It was further revealed that 44.2% of households that had access to microcredit improved their income levels during unfavorable seasons. Findings further revealed that access to microcredit alleviated capital constraints on agricultural households, hence enabling poor households with little or no savings to acquire agricultural inputs and higher-yield technologies that increased labor productivity. The study recommended that NGOs [the ACROSS] and the Government of South Sudan through the National Ministry of Agriculture and food security should formulate policies that regulate short-term food aid, establish government microfinance institutions to ease access to credits, and set up agricultural training centers to enhance citizen's knowledge and skills in modern farming to alleviate food insecurity in the Greater Pibor Administrative Area (GPAA).
... A study conducted by Morduch (1998) investigates the impact of microfinance in Bangladesh, also finds positive results among those who participate in a microfinance programme. The study shows that households served by microfinance programmes all do substantially better than control households. ...
This study is divided into two parts. The first part of the study utilises econometric models to assess the economic performance of clients participating in the microcredit programme of Amanah Ikhtiar Malaysia (AIM). Several proxies are used for the economic performance variable (dependent variable), including level of earnings/income, ratio of spending to income and value of assets. The regressors (independent variables) used are education level, age, amount of loan, source of income and ownership of assets. The second part of this study concentrates on analysing the prospects of introducing Islamic microfinance products to be used in microfinance activities in Malaysia. In the first part of the study, we find that the economic performance of AIM participants is significantly determined by the amount of money borrowed from AIM. Other factors found to influence the respondents’ economic performance are education level, age, gender, assets owned before joining AIM and area of residence. Because level of education is found to contribute significantly to the economic performance of AIM participants, it is suggested that AIM work to educate its borrowers, and more specifically, to provide business training. In the second part of the study, the results show that there is a great demand for Islamic microfinance products in Malaysia. The findings of the study could serve as general guidelines for microfinance institutions in designing Islamic microfinance products for either Muslims or non-Muslim micro-entrepreneurs.
... Its proliferation is fueled by the belief that simply "lending to the poor" will indeed improve their economic (e.g., wealth and income) and social (e.g., education and health status) welfare (Buera et al. [2012]; Coleman [2006]). Many empirical studies have been conducted to understand these impacts of microfinance on income, employment, consumption, asset accumulation, and profits (Angelucci et al. [2015]; Attanasio et al. [2015]; Augsburg et al. [2012]; Kaboski and Townsend [2012]; Karlan and Zinman [2011]; Morduch [1998]; Pitt and Khandker [1998]). However, they are mostly concerned with the short-term effects, and very few studies evaluate medium-and long-term effects, perhaps due to the difficulty of obtaining data with longer time interval between pre-and post-intervention surveys-approximately three years or longer. ...
Although evidence on the impact of microfinance is continuously accumulating, little is known about how long-term presence of microfinance institutions affects household welfare. This study addresses the issue by evaluating a household-level panel data and a unique event in the Philippines when the microfinance industry was mainstreamed and commercialized in the banking sector with microfinance-oriented banks (MOBs), which began to open in 2004. We find that the positive effects of longer MOB presence on entrepreneurial income and activities diminish or even regress over time. Moreover, no significant impacts are noted on real expenditures. Heterogeneity analysis further reveals that no immediate or incremental effects were observed on real expenditures of poor families and the immediate positive effect on entrepreneurial income and activities did not accrue in the long run. Lastly, no significant long-term impacts are noted on real expenditures as well as likelihood of and income from entrepreneurial and wage and salary activities of non-poor families from MOB presence. We, however, argue that MOB presence may reduce vulnerability as it affords households to be entrepreneurs.
... On one hand , the welfarists' school targets the poorest clients, their families and their incomes that are below the poverty line ( $1 per day). A lot of studies argue that achieving social performance of MFIs through the deep of outreach lead to reduce poverty of poorest (Morduch, 1998(Morduch, , 1999(Morduch, , 2000Woller and al. ,1999;Dunford, 1998;Simanowitz and Walter, 2002;Hashemi and Rosenberg, 2006). On the other hand, the institutionalists' school argue that "the best banking practices" are characterized by the absence of ceiling upon lending interest rates, good institutional and human capacity and transparency of financial activities (CGAP, 2004). ...
... For example, Bandiera et al. (2016); Krishna et al. (2012); Asadullah and Ara, (2016); and Ahmed et al. (2009) show that grants and trainings help sustainably uplift the ultra poor segment of the population out of poverty. Similarly, a large number of studies evaluate microfinance though they show mixed evidence with regard its effectiveness (Pitt and Khandker 1998;Morduch 1998, Banerjee et al. 2015. A recent study on credit programme for tenant farmers also reports that the intervention has significantly improved financial inclusion rate among farmers, assisted graduation toward non-farming activities from farming as well as influenced women's participation in income generating activities (Malek et al. 2015). ...
... These results are supported by some previous studies like [16,18,20,34]. However, [29,22,25] are found contradict with this result. ...
... Nous présenteront des études d'impact qui montrent que la microfinance n'atteint pas les plus pauvres des pauvres. Et aussi les autres limites telles que le comportement mimétiques, la saturation du marché, le surendettement des ménages, etc. (Navajas, 1998 ;Morduch, 1998 ;Hulme et Mosley, 1996). ...
La microfinance représente, de part le monde, un moyen de lutte contre la pauvreté en améliorant les conditions de vies des ménages pauvres. Ses effets bénéfiques sont surtout connus dans les pays en voie de développement et elle représente une autre source de financement pour les populations pauvres qui n'ont pas accès aux banques. Cette potentialité du secteur de la microfinance a retenu l'attention des pouvoirs publics, à Djibouti, pour lutter contre la pauvreté et des financements importants ont été investis dans ce secteur. Les enquêtes Djiboutiennes auprès des Ménages (EDAM, 2002 et 2012) ont montré une progression de la pauvreté. Les différentes politiques de lutte contre la pauvreté mises en place depuis la fin des années 90 ont eu un impact très faible dans la lutte contre la pauvreté. Mais peut-on généraliser cet impact positif de la microfinance ? Pour le cas de Djibouti, la microfinance est-elle la réponse adéquate face aux besoins des populations nécessiteuses ? Notre thèse cherche à vérifier par des données empiriques si l'hypothèse d'un impact positif sur le bien-être des clients est toujours d'actualité à Djibouti
... The absence of an all-encompassing financial inclusion measure in these studies may have led to an underestimation or overestimation of the actual impact of financial inclusion on welfare outcomes. The vast microfinance literature where financial products such as loans, savings and insurance are used as measures of financial inclusion (Banerjee et al., 2015;Crépon et al., 2015;Morduch, 1998;Pesqué-Cela et al., 2021;Stewart et al., 2010;van Rooyen et al., 2012) and other alternative measures are used by various authors. Aguila et al. (2016) use ownership of bank account as a measure of financial inclusion; Finkelstein et al. (2012) use access to health insurance; Gyasi et al. (2020) use bank account ownership, savings with a bank, use of automated teller machines (ATMs), access to credit, ownership of a mobile money account and usage of a formal account; Zhang and Posso (2019) and Ajefu et al. (2020) both use ownership of bank account, access to credit and access to insurance. ...
Using a nationally representative household survey data collected from Ghana, this paper investigates the relationship between financial inclusion and household well‐being. The paper computes a comprehensive index for financial inclusion incorporating all its dimensions: availability, accessibility, usage and quality. Our econometric analyses employ both discrete and continuous models to produce robust results. The main result indicates that there are significant welfare gains from increased financial inclusion irrespective of its measure and control for endogeneity. The results also suggest that enhanced financial inclusion increases the likelihood of improving food consumption, medical treatment, cash income and school attendance outcomes. Thus, there is a clear policy implication: increasing financial inclusion will significantly contribute to the attainment of some key Sustainable Development Goals (SDGs).
... Due to the positive effect of microfinance on this dimension of development, microfinance experienced a phenomenal growth and popularity at the end of the twentieth century, particularly after the early works of development economists who advocated it as an effective instrument to alleviate poverty and stimulate socioeconomic development (Hashemi et al., 1996;Morduch, 1998Morduch, , 1999aMorduch, , 1999bMorduch, , 2000Pitt & Khandker, 1998;Pitt et al., 1996;Schuler & Hashemi, 1994). Among other things, microfinance enables the poor to generate income, build assets and minimize vulnerability to economic shocks. ...
To provide uninterrupted financial and non-financial services to the poorer people of the society, Microfinance Institutions (MFIs) need to achieve better financial performance in their operation. In this respect, this chapter explores the relationship between several innovations undertaken by the microfinance industry in recent years and its financial performance objectives. In so doing, we obtained an unbalanced panel data of 2,937 global MFIs, covering the period 2000–2018. Subsequently, the data were analyzed using conventional regression-based techniques (i.e., Pooled OLS and REM), while Generalized Method of Moments and Hausman-Taylor approach was employed to address the potential endogeneity. Our findings are somewhat heterogenous, with limited types of innovations exhibiting a proxy and technique-specific positive influence on the financial performance of MFIs. Notably, we observed that MFIs of certain legal status (eg., bank, rural bank, non-bank financial institutions and credit union/cooperative) showed higher operating and per borrower cost, albeit their increased susceptibility to mission drift compared to the NGO-MFIs.
... Due to the positive effect of microfinance on this dimension of development, microfinance experienced a phenomenal growth and popularity at the end of the twentieth century, particularly after the early works of development economists who advocated it as an effective instrument to alleviate poverty and stimulate socioeconomic development (Hashemi et al., 1996;Morduch, 1998Morduch, , 1999aMorduch, , 1999bMorduch, , 2000Pitt & Khandker, 1998;Pitt et al., 1996;Schuler & Hashemi, 1994). Among other things, microfinance enables the poor to generate income, build assets and minimize vulnerability to economic shocks. ...
Despite the origination of modern microfinance in Bangladesh, its mechanism has root in other countries, albeit in a different names or forms. In this chapter, we reviewed the historical setting of microfinance in the context of Bangladesh, followed by the direct and indirect effects of its financing schemes on the borrowers. Our assessment revealed that microfinance has a greater role than mere poverty eradication. This includes promotion of entrepreneurship, women empowerment and other socioeconomic development initiatives. While there are several types of MFIs currently operating across the countries, our assessment based on secondary data revealed that region-wise types of MFIs also differ. As an instance, NGOs dominate the microfinance market in South Asian; Non-Bank Financial Institutions (NBFIs) in the Latin America & the Caribbean (LAC), Middle East and North Africa (MENA), and Eastern Europe & Central Asia (EECA); and credit union/cooperatives (CU/C) in Africa.
... Due to the positive effect of microfinance on this dimension of development, microfinance experienced a phenomenal growth and popularity at the end of the twentieth century, particularly after the early works of development economists who advocated it as an effective instrument to alleviate poverty and stimulate socioeconomic development (Hashemi et al., 1996;Morduch, 1998Morduch, , 1999aMorduch, , 1999bMorduch, , 2000Pitt & Khandker, 1998;Pitt et al., 1996;Schuler & Hashemi, 1994). Among other things, microfinance enables the poor to generate income, build assets and minimize vulnerability to economic shocks. ...
Although started with a sole purpose of providing credit to the financially excluded in the early 1970s, modern microfinance institutions (MFIs) now offer various financial products and services along with a diverse set of non-financial products. To better understand product baskets of MFIs, this chapter exploits secondary sources of data to highlight some of the environmental and socio-economic development-related products, including non-financial and financial products. In so doing, some excellent examples were drawn from Bangladesh’s leading and top-performing MFIs. The finding shows that, apart from its flagship credit/deposit facilities, MFIs in Bangladesh offer diverse set of products and services, such as solar energy, education, religious and old home facilities, agricultural and food security, legal aid, healthcare, etc., all of which are aimed at addressing various environmental and societal challenges. Details of each product (selected) are scrutinized and discussed in this chapter.
... For that reason, the urgent needs of microfinance could possibly survive them sometimes; then, this might push them to work harder to compensate the costs. According to Morduch (1998), the potential effect of microfinance is positively associated with a decrease in vulnerability. The consumption-smoothing effect seems to be probably driven by income-smoothing. ...
La thèse vise à éclairer empiriquement les liens multiples entre mondialisation, inégalités, et pauvreté aux pays asiatiques en portant une attention particulière au Cambodge. Le premier chapitre propose une perspective historique, l'héritage politique du Cambodge et son influence sur la trajectoire d'ouverture, sur l'évolution récente des inégalités, de la pauvreté et plus largement sur les performances macroéconomiques du pays. Le deuxième chapitre se concentre sur la dimension commerciale et étudie les liens entre spécialisations commerciales et inégalités à une échelle plus globale, celle de 52 pays d'Asie et de l'Europe d’Ouest. Le troisième chapitre est centré sur le lien entre ouverture et pauvreté au Cambodge via des données d'enquête appliquée à l'échelle de régions du pays. Le quatrième chapitre souligne l’impact du développement financier sur le développement humain et l’inégalité dans les pays de l’Asie du Sud-Est. Enfin, le cinquième chapitre étudie la relation qui existe entre l'intervention du gouvernement, la qualité des institutions et les inégalités, en s'appuyant sur les données des pays de la région Asie-Pacifique.
... Joint liability can also overcome enforcement problems because fellow group members can apply social sanctions, while lenders cannot apply financial sanctions because loans are given without collateral. Using the concept of joint liability, microfinance institutions such as Grameen Banks can serve poor people whom no ordinary commercial lender would want as a customer and do so with higher repayment rate than conventional lending institutions (Hossain 1988;Morduch 1998). ...
Research on agriculture crowdfunding in developing countries is still limited. The crowdfunding platform offers uncollateralised loans to farmers. Therefore, they apply joint liability group lending to lower the default risk. However, from farmer’s point of view, joint liability causes higher risk since every group member bears his/her own risk and that of all other group members. Thus, the purpose of this article is to analyse how joint liability may lower the risk of both farmer and agriculture crowdfunding in Indonesia. A deductive qualitative research design with case study approach is used in this article. A series of in-depth interviews were conducted with one agriculture crowdfunding platform and two farmer groups. Data analysis was conducted by using pattern matching technique. The findings of this article are as follows: joint liability may lower the default risk of crowdfunding platform because the farmer groups are self-selected. The leader of the farmer group plays an important role in monitoring the members, and he may apply social sanction to the defaulting member. By implementing joint liability group lending, crowdfunding platform can provide extension services such as price certainty through contract farming, field agent monitoring and non-cash credit disbursement. These extension services help to lower the farmer’s risk.
... Microfinance initiatives can even make access to healthcare more affordable as well as improve nutrition and empower women (Khandker, 2005). Furthermore, more children go to school with longer enrollments (Morduch, 1998). A Credit Summit study in 2020 found that, of almost 140 million borrowers served in the microfinance industry, two thirds were living in rural areas not traditionally served by the banking industry and, of all the borrowers, four out of five were women. ...
Prosocial microfinance institutions have struggled to scale up their efforts toward alleviating poverty while continuing to reach the suitable borrowers without overburdening them with debt. Peer-to-peer crowdfunding organizations try to address this challenge by connecting socially conscious lenders with small-scale entrepreneurs through storytelling. Prior studies described such storytelling as a powerful source of knowledge managed to determine whether a microloan proposal is attractive to potential lenders and ultimately funded. Researchers also devised important categories into which they screen the language within the borrowers' narratives to indicate the prevalence of certain keywords in the stories. To further examine the impact of the borrowers' stories on the likelihood of speedy and successful funding, this paper reviews relevant research and practice and suggests applying natural language processing in a bottom-up approach, where the entirety of narratives is considered for holistically managing information within the narratives and producing the storytelling themes organically, without preconceived categories. This might help aspiring small-scale entrepreneurs and their potential microlenders find the right fit quicker, reducing the opportunity cost and making crowdfunding campaigns more successful.
... Moreover, it is also empirically known that informal mechanisms are only responsive to 'idiosyncratic' shocks such as illness, death, or job loss. These mechanisms leave the household less resilient in the face of broader 'covariate' shocks, because such shocks affect the livelihoods and income of the whole community, resulting in the breakdown of mutual assistance mechanisms between households in a community (Alderman and Haque, 2007;Morduch, 1998). According to these studies, in times of covariate shocks such as flood, rise in prices, or other weather-related shocks, the overall effects are worse for the poor, because the mutual assistance networks fail to exist due to limited resources held by such households. ...
This study examines poor households’ vulnerability to idiosyncratic and covariate shocks in Pakistan. First, it observes households’ socioeconomic, demographic, and geographic factors that influence the incidence of shocks. Second, it examines households coping strategies adopted to mitigate the negative effects of these shocks. For this purpose, we have studied the shock patterns in poor households and examined the role of the Benazir Income Support Program (BISP) in protecting these households against various shocks. Results indicate simultaneous exposure of idiosyncratic and covariate shocks to the targeted households. Moreover, with a low level of physical and financial assets owned by these households, they resort to coping strategies which are further damaging in nature. We also analyzed shock coping strategies of the sampled households and found that informal coping mechanisms are more prevalent among the poor households when hit by shocks. We have concluded that BISP is ineffective in protecting households in times of shocks and it is thus suggested that the transfers under this program should be generous in size and responsive to shocks in order to be an effective coping strategy for the poor.
... The empirical evidence on the impact and expansion of micro-credit on poverty is very diverse (see for example, Morduch, 1998Morduch, , 1999Schrieder and Sharma, 1999;Hossain, 1988;Islam, 2015;Chowdhury et al., 2005;Newaz, 2003;Rahman, 1999;Hossain and Knight, 2008;Alom, 2014;Mazumder, 2015;Datta, 2004;Zaman, 2004;Mallick, 2002;Mallick, 2009 With deep thinking of these questions in mind, this research has been carried out based on the concept and analytical frameworks (details in chapter 2), and attempt to find out the possible causing factors of microcredit expansion at the adjacent area of Sundarbans. ...
Growing emergence of micro-credit has been widely acknowledged since it possesses
significant potential for alleviating poverty. In microcredit functioning, Non-governmental
Organizations (NGOs), intend to utilize available resources for facilitating poor people’s
income generating activities. There is a considerable debate, if the donors’ formal and
informal interests drive microcredit system, though agreement exists with NGOs for
running development projects in respective locality. This paper examines the causes of
microcredit expansion on aiming to find any causal link, if present between the
independent variables—local people’s financial status and available financial supports of
the NGO with the dependent variable—microcredit expansion.
Considering the ecological and socio-economic importance of the Sundarbans Mangrove
Forest (SMF), the activities of an NGO around it were taken as the case for this study since
local people’s livelihood depends largely on the SMF’s natural resources. Following a
quantitative research approach, content analysis of the on-field collected documents about
microcredit and projects of the selected NGO were carried out as an empirical method. The
results indicate that the expansion of microcredit depends on its high demand due to local
people’s economic condition and the availability of financing sources.
The analysis observes that the financing from donors and government sources informally
acts as seed money of microcredit functioning—which established long-term expansion
through handling large contributory funds from borrowers’ savings. Although, donors’
formal interests bound for pursuing local people’s alternative income generating activities
beyond the resources of the SMF, donors acknowledge micro-credit expansion as part of
informal interests to operate their future activities with the local NGOs. Since, this research
has carried out based on the organizational data, household survey following individual
interview and focus group discussion of microcredit recipients can give more interesting
findings in further research to analyze local community’s adoption of microcredit towards
securing their livelihood.
... Chatterjee et al. (2018) found that group based financial services to micro-enterprises empower women borrowers and translate into economic up-liftment. On the other hand, Morduch (1998) argues that micro-credit has only minimal impact on poverty reduction because it rather supports borrowers to create basic incomes instead of driving fundamental economic shifts. One reason for these contradicting results could be the indicators that are used to measure impacts because they are influenced by the view of the respective analyst (Duvendack and Maclean 2015). ...
Microfinance services have emerged as an effective tool for financing micro-entrepreneurs to alleviate poverty. Since the 1970s, development theorists have considered non-governmental microfinance institutions (MFIs) as the leading practitioners of sustainable development through financing micro-entrepreneurial activities. This study evaluates the impact of micro-finance services provided by MFIs on poverty alleviation. In this vein, we examine whether microfinance services contribute to poverty alleviation, and also identify bottlenecks in micro-finance programs and operations. The results indicate that the micro-loans have a statistically significant positive impact on the poverty alleviation index and consequently improve the living standard of borrowers by increasing their level of income.
... Second, although access to microfinance has been considered as an anti-poverty tool, the evidence of its effectiveness on poverty reduction is unequivocal. For example, Pitt and Khandker (1998) found positive effects of microfinance on consumption but, using the same data, Morduch (1998) finds no significant impacts. Recently, reviewing six articles on randomised evaluations of microfinance, Banerjee et al. (2015b) conclude that, while microfinance sometimes leads to an increase in business activity, the effect on average business profit is much more limited; there is no effect on consumption over a one-to three-year time period. ...
... The strongest predictor of income among control explanatory variables is education indicating that a higher education level of the household head leads to a greater probability of an increase in household income. This finding is consistent with Morduch (1999); Akram and Hussain (2011) and Li et al. (2011) that found microfinance services amplified the income and living standard of most of the beneficiaries' households. ...
Micro finance institutions play a significant role in economic development of India. Such institutions provide financial access to lower income people. These institutions are very helpful for poor people who lack access of banking services. Micro finance institutions provide a large variety of financial and non-financial services to people including credit, counseling, and training. Such institutions are necessary to achieve rural development, financial inclusion and women empowerment. Today micro finance institutions are faced many problems. Problems of non-performing assets are considered as a big challenge for micro finance institutions. Financial illiteracy, lack of speedy generation of funds, lack of proper infrastructure, political interference and competition are the other challenges faced by micro finance institutions. This chapter made an attempt to analyze the problems faced by micro finance institutions and understand the role of micro finance in rural development
This study explores the transformative impact of microfinance on the lives of women in Kanchanpur, emphasizing the role of microcredit in fostering economic self-reliance and social empowerment. The research aims to analyze the contributions of women entrepreneurs, evaluate socio-economic activities, and assess the effectiveness of microfinance in improving living standards. The investigation focuses on the ability of group-based micro loans to alleviate poverty, address socio-economic vulnerability, and foster the formation of social capital among women in Kanchanpur. Using a descriptive survey research method with both quantitative and qualitative paradigms, the study randomly selects 350 informants from five microfinance institutions in Kanchanpur. Data collection involves schedules, focus group discussions, interviews, and field observations. The research framework includes control, dependent, and independent variables, with four criteria—access, creation, and control over private resources; decision-making freedom at home; self-confidence in socio-economic activities; and status in the community and family— used to examine the impact of microfinance on women’s empowerment. The empirical findings reveal that small loans provided by microfinance institutions stimulate income-generating activities among rural women, leading to improvements in their well-being and socio-economic status. The study concludes that women owning and utilizing microcredit positively influences their decision-making abilities at home, contributing to an overall elevation of their socio-economic status. The results suggest a need for government initiatives to facilitate rural women through targeted microcredit schemes, thereby further promoting women’s empowerment in Kanchanpur.
Women’s empowerment is indispensable for sustainable development. Microcredit initiatives are seen as critical in that adventure, enabling women to achieve economic, political, and psychological boosts that are otherwise absent for the destitute poor. However, microcredit is not a panacea that can cure all odds women face in a patriarchal society like ours. There are literature documenting positive effects of microcredit on the living and being of millions of poor women in the developing countries like Bangladesh. Microcredit enables destitute women to access financial services, facilitates employment-generating activities, boosts self-esteem, increases mobility, raises awareness, improves socio-political position, and helps form social and institutional capital. But such benefits are not sustainable and will not bring lasting effect until long-term challenges are addressed with due caution. This is because women’s empowerment is a multidimensional phenomenon that requires a collective action for development. Microcredit programs have been subject to scrutiny and face harsh criticisms in recent time. There are often reports and anecdotes that are contradictory to the conventional claims of poverty alleviation of women empowerment. These controversies often led scholars to debate and divide across certain lines. Considering this ongoing debate, this paper critically explores the effect of microcredit on women’s empowerment in the context of Bangladesh.
Laos is a poor country; 62.01% of the population lived with an income below US$2 per day, and 23.2% of people lived below the national poverty line (World Bank, 2015). There are various reasons for this poverty rate. One reason is the lack of capital for production or income-generating activities because the villagers cannot access credit. Therefore, the government of Laos recognizes microfinance as a major tool for poverty reduction by providing capital to poor and low-income households. The Nayoby Bank is one of the government's financial institutions that provides credit to people for income-generating activities to achieve the goal of reducing the poverty rate to less than 10% in 2020 (MPI, 2016). There is a debate on the impact of microfinance, as some researchers have confirmed that microfinance has a positive impact on household income and consumption and can reduce poverty. The impact of microfinance on income, consumption, and poverty are still in question, as is the lack of examination of the effect of Nayoby bank credit on household income and consumption in the Sam Sang Pilot Project Area of Government at Champasak Province, Lao PDR. This is important to achieve the goal of reducing poverty in Laos.
Therefore, the main objective of this study is to examine the impact of microfinance in terms of Nayoby bank credit on household income and consumption. In order to respond to this objective, we conducted a survey of 261 households in the Sam Sang Pilot Project Area of Government in Paksong district, Champasak province. The regression model is applied to examine the impact of microfinance on household income and consumption. We found that the Nayoby bank credit has a significant positive impact on household income from agriculture and consumption and also increases food consumption. This study suggests that policymakers or private agencies should help people in rural areas, especially farmers, access credit from the Nayoby Bank and extend credit to those with low incomes or the poor to create jobs, generate income, and achieve the poverty reduction goal in 2020.
The Oxford Handbook of Banking, second edition provides an overview and analysis of developments and research in banking written by leading researchers in the field. This handbook will appeal to graduate students of economics, banking and finance, academics, practitioners, regulators and policymakers. Consequently, the book strikes a balance between abstract theory, empirical analysis, and practitioner and policy-related material. The handbook is split into five parts. Part I, The Theory of Banking, examines the role of banks in the wider financial system, why banks exist, how they function, and their corporate governance and risk management practices. Part II deals with bank performance and operations. A range of issues are covered including bank performance, financial innovation and technological change. Aspects relating to small business, consumer and mortgage lending are analyzed together with securitization, shadow banking, and payment systems. Part III, entitled Regulatory and Policy Perspectives, discusses central banking, monetary policy transmission, market discipline, and prudential regulation and supervision. Part IV of the book covers various macroeconomic perspectives in banking. This part includes a discussion of systemic risk and banking and sovereign crises, the role of the state in finance and development as well as how banks influence real economic activity. The final Part V examines International Differences in Banking Structures and Environments. This part of the handbook examines banking systems in the United States, European Union, Japan, Africa, Transition countries, and the developing nations of Asia and Latin America.
This study assesses the capacity and financial status of microfinance institutions (MFIs) operating in the province of Nueva Ecija, Philippines. The Philippines is one of exiguous countries with a national microfinance policy. The Microfinance NGOs Act, also known as Republic Act No. 10693, defines microfinance as the feasible and sustainable provision of a wide variety of financial services to poor and low-income persons engaged in livelihood and microenterprise activities. This study argued that to continue providing satisfactory service to the poor, MFIs must be viable and sustainable. The objective of this study is to examine the borrowers’ degree of service satisfaction to microfinance institution including their business and financial status. The descriptive correlational research technique was utilized to acquire the essential data for the study. Survey questionnaire and un-restructured interview was also employed to collect and triangulate data. According to the findings of the study, microfinance institutions operating in the province of Nueva Eija provided an excellent service to their borrowers, as demonstrated by a very satisfied rating of its clients for loan application processing and loan basic component of services and borrowers perceived that Microfinance Institutions (MFIs) played an important role in fostering financial inclusion in local communities, particularly among low-income households as evidenced by very high and high business and financial status.
The bulk of the world's extreme poor work in subsistence agriculture. Diversification out of this activity is often seen as the sine qua non of economic development. We evaluate whether the roll‐out of a mainstay development intervention—microfinance—into poor, agricultural and largely unbanked populations in rural Uganda helps borrowers to diversify into non‐agricultural labour activities. The new microfinance product is targeted to women, and differs from existing sources of formal and informal credit in that it allows them to borrow larger amounts but has inflexible repayment dates and the use of funds is monitored. We find that the arrival of microfinance enables women to diversify out of agriculture and into service‐based activities such as small‐scale trading. This low‐level structural change, however, is not transformative in that it does not lead—at least after two years—to significant uplifts in earnings, consumption, savings, investment and overall wealth.
Self Help Group (SHG) and Micro- finance are being considered as important tools for poverty alleviation through empowering the poor and underprivileged section of the society. The present article is an attempt to analyze the impact of Self Help Groups
(SHGs) and Micro-Finance on poor tribal women of a tribal inhabited area of Madhya Pradesh. This paper attempts to give an account of the SHGs of the study areas, the participation of poor tribal women into the SHGs on women empowerment. Result
of the study indicated that there is a significant difference between the level of empowerment between pre-SHGs and post - SHGs situation. Liner regression was used to find out whether age, educational level, structural condition of the house, cost of
employment and initial capital investment are a useful predictor of familial income or not. Regression analysis results show that structural condition of the house, cost of employment and initial capital investment are useful predictors of familial income
from SHGs for the beneficiaries. Finally the paper concludes all the poor families are organized into self-managed, increased income, actually empowerment is a multidimensional phenomenon. The study focuses on the impact of SHGs on empowerment of tribal women, social unity and socio-economic development and its consolidation is poor.
The objective is to check performance of microfinance loan in context of social performance and its various dimensions i.e health, education, clean water and women empowerment. Likewise study also test moderating effect of loan transparency and ownership structure between micro-finance loan and social performance. The survey-based approach was used with a sample size of 350. Data was collected through self-administered questionnaires from the client of a microfinance institution in a different region of Sindh. In response 273 completed questionnaires were received from respondent and response rate was 78%. Among those 273 questionnaires, 19 were unengaged responses so were considered unsuitable for analysis and reaming 254 questionnaire were used for data analysis. The Smart PLS Technique was used for data estimation in this study. Findings of the existing study portrays significant impact of microfinance loan on social performance as well as on its various dimensions i.e Health, Education, Clean Water and women empowerment. The moderating impact of transparency is positively significant in social performance, and the moderating impact of ownership structure in social performance is showing negative significant impact. The result of this study can lead to significant contributions and provide a better understanding and influence of transparency and ownership structure on the social performance of microfinance loans as well as dimensions of social performance. Financial sources of micro finance loan would be beneficial for poor people, micro enterprise and epically for empowerment of women in emerging economy. Micro finance institutions should control in interest rate and create an awareness regarding utilization of loan and timely repayment among their customers.
En el presente artículo abordo uno de los problemas analíticos relativos al abordaje etnográfico de la "creatividad" en relación al cambio social. Considero, específicamente, la tensión implícita entre "lo nuevo" y "lo viejo" que lleva en sí esta noción. A través de un análisis etnográfico y comparativo de diversos casos y ejemplos, intento encontrar cierta unidad en una diversidad de situaciones, relaciones y procesos en los cuales diferentes grupos se disputan la definición de "lo nuevo" y de lo que, en consecuencia, sería "viejo", así como las razones de ello. Lo que todos estos casos y ejemplos tienen en común es la convicción, por parte de los actores, de que cierto tipo de situaciones, relaciones y/o procesos deben cambiar debido a que son considerados como socialmente problemáticos. Por ejemplo: la tergiversación de la realidad por parte de los medios masivos de comunicación, cómo prestar dinero a los pobres para que puedan salir de su condición, o cómo lidiar con la escasez de agua.
This chapter examines the grassroots mobilisation in recovering from a major disaster in Myanmar after Cyclone Nargis in 2005. It highlights socioeconomic vulnerabilities at a collective level in rural Myanmar. It argues that identifying these vulnerabilities and strengthening the rural residents' capabilities is an important tool to maintain the well-being in the time of disasters. It also explores how different coping strategies improve the recovery of well-being after disasters. The increasing number of natural disasters and global climate change challenges the rural people in Myanmar. During the past decades, the country faces changes, institutionally and noninstitutionalised social transformation. The democratisation process initiated in recent years may create opportunities for the mobilisation of grassroots organisations in responding to the needs of rural people and enhance their capabilities to cope with changes in the natural environment. This research aims to provide policy recommendations towards democratic reforms in strengthening rural people's resilience in Myanmar.
Empowerment measured in the context of poverty reduction program introduced in distinct settings world over demands different measurement frameworks. Empowerment is one of the most disputed concepts to be handled while interpreting the benefits of poverty interventions. It is, therefore, important to state clearly how the concept will be interpreted and evaluated in each context. The current discussion is about the framework devised for the State of Kerala, one of the most advanced states in the largest democracy in the world, India. The framework becomes relevant because of the several unique features of the state of Kerala, which are quite distinctive from many other places where microfinance has been found to be successful. The paper discusses a conceptual framework for measuring the level of empowerment resulting from microfinance in the State of Kerala.
Existing evidence shows that programs that provide grants to productive assets along with training to very poor women increase labor supply, earnings, and consumption. In contrast, evidence on the effect of microcredit on these outcomes is mixed. In this paper, we examine the effect of a hybrid of the two approaches—credit and grant—on the livelihoods of the ultra‐poor in Bangladesh. A randomized evaluation of the hybrid intervention shows that it increases labor supply of working‐age women, household income, productive assets, savings, and consumption expenditures. The benefit–cost ratio of the intervention is estimated to be 8.47.
Statistical methods for program evaluation with nonexperimental data have been studied by economists and econometricians over the last 20 years. These methods are concerned with laying out the precise circumstances under which valid nonexperimental estimates of the effects of an intervention can be obtained, and then with methods for determining when and if those circumstances hold. This article provides a simple exposition of the methods of identification that have been developed and draws the lessons of those methods for future evaluation designs, data collection, and analysis.
Contends that programs of social reform are not effectively assessed. This article is a preliminary effort in examining the sources of this condition and designing ways of overcoming the difficulties. The political setting of program evaluation is also considered. It is concluded that trapped and experimental administrators are not threatened by a hard-headed analysis of the reform. For such, proper administrative decisions can lay the base for useful experimental or quasi-experimental analyses. Through the ideology of allocating scarce resources by lottery, through the use of staged innovation, and through the pilot project, true experiments with randomly assigned control groups can be achieved. If the reform must be introduced across the board, the interrupted time-series design is available. If there are similar units under independent administration, a control series design adds strength. If a scarce boon must be given to the most needy or to the most deserving, quantifying this need or merit makes possible the regression discontinuity analysis." (48 ref.) (PsycINFO Database Record (c) 2012 APA, all rights reserved)
This paper considers the use of instrumental variables to estimate the mean effect of treatment on the treated, the mean effect of treatment on randomly selected persons and the local average treatment effect. It examines what economic questions these parameters address. When responses to treatment vary, the standard argument justifying the use of instrumental variables fails unless person-specific responses to treatment do not influence decisions to participate in the program being evaluated. This requires that individual gains from the program that cannot be predicted from variables in outcome equations do not influence the decision of the persons being studied to participate in the program. In the likely case in which individuals possess and act on private information about gains from the program that cannot be fully predicted by variables in the outcome equation, instrumental variables methods do not estimate economically interesting evaluation parameters. Instrumental variable methods are extremely sensitive to assumptions about how people process information. These arguments are developed for both continuous and discrete treatment variables and several explicit economic models are presented.
This paper estimates the impact of participation, by gender, in the Grameen Bank and two other group-based micro credit programs in Bangladesh on labor supply, schooling, household expenditure, and assets. The empirical method uses a quasi-experimental survey design to correct for the bias from unobserved individual and village-level heterogeneity. We find that program credit has a larger effect on the behavior of poor households in Bangladesh when women are the program participants. For example, annual household consumption expenditure increases 18 taka for every 100 additional taka borrowed by women from these credit programs, compared with 11 taka for men.
This article examines the effect of group-based credit used to finance self-employment by landless households in Bangladesh on the seasonal pattern of household consumption and male and female labour supply. This credit can help smooth seasonal consumption by financing new productive activities whose income flows and time demands do not seasonally covary with the income generated by existing agricultural activities. The results, based upon 1991/92 survey data, strongly suggest that an important motivation for credit programme participation is the need to smooth the seasonal pattern of consumption and male labour supply. It is only the extent of lean season consumption poverty that selects household into these programmes. In addition, the largest female and male effects of credit on household consumption are during the lean season.
Group-based lending programs for the poor have drawn much attention recently. As many of these programs target women, an important research question is whether program participation significantly changes reproductive behavior and whether the gender of the participant matters. Using survey data from 87 Bangladeshi villages, we estimate the impact of female and male participation in group-based credit programs on reproductive behavior while attending to issues of self-selection and endogeneity. We find no evidence that women's participation in group-based credit programs increases contraceptive use or reduces fertility. Men's participation reduces fertility and may slightly increase contraceptive use.
The Grameen Bank is a specialized financial institution in Bangladesh that was established to provide credit to the rural poor for the purpose of improving their economic conditions with the hypothesis that if the poor are supplied with working capital they can generate productive self-employment without external assistance. Loans from the Grameen Bank are used primarily for undertaking noncrop activities. The loan repayment performance is excellent. Only 0.5 percent of loans to 975 borrowers surveyed were overdue beyond one year, and overdue weekly installments (before the expiration of the one-year repayment period) were only 3.3 percent of the total amount borrowed. The Grameen Bank concept of credit without collateral should work in other countries with widespread poverty and underemployment. But elements like taking the bank to the people and intensive interaction of bank staff with borrowers may be inappropriate and highly expensive for sparsely settled areas with underdeveloped transport systems. For such environments, an appropriate delivery mechanism has to be worked out.
We outline a framework for causal inference in settings where assignment to a binary treatment is ignorable, but compliance with the assignment is not perfect so that the receipt of treatment is nonignorable. To address the problems associated with comparing subjects by the ignorable assignment - an "intention-to-treat analysis" - we make use of instrumental variables, which have long been used by economists in the context of regression models with constant treatment effects. We show that the instrumental variables (IV) estimand can be embedded within the Rubin Causal Model (RCM) and that under some simple and easily interpretable assumptions, the IV estimand is the average causal effect for a subgroup of units, the compliers. Without these assumptions, the IV estimand is simply the ratio of intention-to-treat causal estimands with no interpretation as an average causal effect. The advantages of embedding the IV approach in the RCM are that it clarifies the nature of critical assumptions needed for a causal interpretation, and moreover allows us to consider sensitivity of the results to deviations from key assumptions in a straightforward manner. We apply our analysis to estimate the effect of veteran status in the Vietnam era on mortality, using the lottery number that assigned priority for the draft as an instrument, and we use our results to investigate the sensitivity of the conclusions to critical assumptions.
One way that risk-averse households protect consumption levels is to borrow and use insurance mechanisms. Another way, common in low-income economies, is to diversify economic activities and make conservative production and employment choices. Households thus tend toward limiting exposure only to shocks that can be handled with available credit and insurance. Typically, both types of mechanisms are studied independently but much more can be learned by studying them together. First, we obtain a more complete picture of risks, costs, and insurance possibilities. Second, it opens the way to considering biases in standard tests of credit and insurance. Copyright 1995 by American Economic Association.
The Microcredit Summit Report
- Microcredit Summit
Microcredit Summit (1997), The Microcredit Summit Report. Washington, DC: RESULTS Educational
Fund.
Targeting Credit and Insurance: Efficiency, Mechanism Design, and Program Evaluation
- Mansoora Rashid
- Robert M Townsend
Rashid, Mansoora and Robert M. Townsend (1993), "Targeting Credit and Insurance: Efficiency,
Mechanism Design, and Program Evaluation," The World Bank and University of Chicago, draft.
Those Left Behind: A Note on Targeting the Hardcore Poor Who Needs Credit? Poverty and Finance in Bangladesh
- Syed Hashemi
Hashemi, Syed (1997), " Those Left Behind: A Note on Targeting the Hardcore Poor, " chapter 11 in
Geoffrey Wood and Iffath Sharif, eds., Who Needs Credit? Poverty and Finance in Bangladesh.
Dhaka: University Press Limited.
Micro-Credit Programmes: Who Participates and What Does it Matter? " chapter Who Needs Credit? Poverty and Finance in Bangladesh
- Hassan Zaman
Zaman, Hassan (1997), " Micro-Credit Programmes: Who Participates and What Does it Matter? " chapter
10 in Geoffrey Wood and Iffath Sharif, eds., Who Needs Credit? Poverty and Finance in
Bangladesh. Dhaka: University Press Limited.
The effect of microfinance credit on children's education: evidence from the Grameen Bank
- Jessica Chase
Chase, Jessica (1997), The effect of microfinance credit on children's education: evidence from the
Grameen Bank. Harvard University Undergraduate Honors Thesis in Economics.
Bad Credit: Microcredit yields macroproblems The New Republic
- John Buntin
Buntin, John (1997), " Bad Credit: Microcredit yields macroproblems, " The New Republic, March 31: 10-
11.
Influence of the Grameen Bank on Contraceptive Use in Bangladesh
- Mizanur Rahman
- Julie Da Vanzo
Rahman, Mizanur and Julie Da Vanzo (1997), "Influence of the Grameen Bank on Contraceptive Use in
Bangladesh", ICDDR,B/RAND working paper.
Microloans for the very poor
New York Times (1997), "Microloans for the very poor" [editorial], February 16.
Microlending: From Sandals to Suits
- Economist Magazine
Economist Magazine (1997), "Microlending: From Sandals to Suits," February 1: 75.
Bad Credit: Microcredit yields macroproblems
- John Buntin
Buntin, John (1997), "Bad Credit: Microcredit yields macroproblems," The New Republic, March 31: 10-11.
The Analysis of Household Surveys. Baltimore: The World Bank
- Angus Deaton
Deaton, Angus (1997), The Analysis of Household Surveys. Baltimore: The World Bank/Johns Hopkins
University Press.
Micro-Credit Programmes: Who Participates and What Does it Matter?" chapter
- Hassan Zaman
Zaman, Hassan (1997), "Micro-Credit Programmes: Who Participates and What Does it Matter?" chapter
10 in Geoffrey Wood and Iffath Sharif, eds., Who Needs Credit? Poverty and Finance in
Bangladesh. Dhaka: University Press Limited.