Academic literature on the topic 'Microfinance'

Microfinance institutions are established to promote the financial activities mainly saving and credit in community. Microfinance’s activities are focused on reducing poverty level of community people. Poor, disadvantaged, marginalize and women are in mainstream of microfinance’s programs. The study was focused on finding out the contribution of microfinance on socio-economic development of rural community. The study was based on the quantitative design. Cross-sectional data was collected from the 8 microfinances of Syangja district. Purposive sampling technique was adopted to select the respondents. The perceptual analysis of data reported the significant contribution of micro-finance in social change and development. Microfinances working since 2 to 20 years covering the diverse field of social activities were the samples of the study. There was a need to improve the internal management of microfinance to provide the services more effectively.

This article deals with the issue of client solvency in microfinance. Microfinance includes all financial products and services designed for a public excluded from traditional banking circuits. The development of these microfinances is a very important issue and makes it possible to reduce the unemployment rate. However, the lack of customer solvency makes the management of these microfinances complex. In this article, we propose a microfinance management technique based on the use of K-nearest neighbor (KNN) and smart contract algorithms. The proposed approach makes it possible to model the behavior of a customer to arrive at their solvency.

Microfinance offers loans to the poor with the aim of improving their living standards. Empowerment of microfinance becomes important and strategic through the formulation of policies and programs that are right on target. However, in its development there are still problems faced, especially the difficulty of accessing capital and financing. This study aims to examine how perceived benefits mediate the effect of microfinance accessibility on the utilization of microfinance. This study utilized a quantitative approach by using a structured questionnaire developed for the purpose in consultation with experts in the field. Survey was conducted in 2021 of 629 microfinances at Banten Province, Indonesia. Moderated regression analysis was used in data analysis. The result shows that the impact of microfinance accessibility on increasing the utilization of microfinance when the perceived benefit is maximized. This study recommends other constructs such as financial literacy, community, and population density as factors which driving microfinance growth. The results can be a reference for policy makers to further improvement of the existing policy framework and provide more opportunities for microfinance to improve its service strategy to the community.

Mikrofinanz hat sich zu einem entwicklungspolitischen Schlagwort ausgebildet. In der Entwicklungszusammenarbeit gilt die Vergabe von Kleinstkrediten seit langem als Erfolgsmodell. Was steckt hinter diesem durch den Friedensnobelpreisträger Muhammad Yunus bekannt gewordenen Instrument? Wie sieht die Praxis in den Entwicklungsländern aus? Gibt es für Mikrofinanzierungen auch einen Markt in den entwickelten Ländern. Microfinance has raised high expectations regarding poverty alleviation in the developing countries. Lack of empirical evidence has not, however, diminished the enthusiasm of the proponents of microfinance. The perception that microfinance plays an important role in poverty alleviation has attracted substantial assistance from international donors and local governments. What are the instruments and tools for implementing microfinance successfully in a country? What are the challenges? We have chosen Uganda in East Africa as a good example to see the lessons learnt in microfinance. Even in the industrialized world microfinance plays a more and more important role in the financial sector for customers and institutional investors. Keywords: mikrofinanzierungen, microfinances

The microfinance system is one of the governmental and non-governmental initiatives to eradicate poverty, even though conventional microfinance does not satisfactorily serve the needs of underprivileged households in Nigeria. However, Islamic microfinance has great potential to facilitate its roles in providing financial services per Islamic values. This research examines Islamic microfinance's perception of poverty eradication in the Kwara State of Nigeria. The 364 responses from microfinance clients in Ilorin, Kwara State of Nigeria, were analyzed through SPSS using descriptive and Pearson coefficient moment correlation (PPMC). The findings indicated a positive statistically significant correlation between Islamic microfinance and household income (PEHI), healthcare (PEHC), education(PEED), and employment(PEEM). This study is significant as it presents the applicability of Islamic microfinance for eradicating poverty in the study area. Policymakers should widely institutionalize Islamic microfinance institutions nationwide and take necessary and exclusive measures to ensure their effectiveness for poverty eradication and achieving sustainable socioeconomic development.

Many researchers consider microfinance as a tool for poverty reduction. Even more, especially in post-conflict African countries, micro-financial institutions are seen as an opportunity of reconciliation. Lending from microfinance institutions to that from traditional banks and examine their respective effects upon economic growth has been practiced in some sub-Saharan countries. Considerable progress in research has been found that microfinance loans raise growth comparatively to that of traditional banks. A lot of number of researches carried out in sub-Saharan countries even in other developing countries outside of Africa did not find strong evidence that bank loans raise growth. There is, however, some evidence that bank loans do increase investment, whereas microfinance loans do not appear to do so. Differently, other researchers highlighted clearly that microfinance can provide its contribution on poverty reduction and better access to finance needed for startup micro-entrepreneurs along the world. These results suggest that microfinance loans are not primarily invested as physical capital in developing countries, but could still augment total factor productivity, whereas banks may have been financing non-productive investments. Herein, we highlighted the impact of microfinance banks on developing countries economic growth. We also indicate how microfinances system incorporated in rural areas boosted the lifestyle of poor people in Sub-Saharan Africa.

Statistics indicate that about 1.7 billion people can’t access a savings account and slightly above 200 million small and medium-sized enterprises are deprived access to satisfactory financial solution. Kenya views microfinances as a development instrument for poverty lessening and economic growth through ensuring financial inclusion. It is due to the acceptance of this vital role of Microfinance that Kenya has undertaken strategic microfinance reforms and regulations aimed at promoting financial inclusion through microfinance business. The research’s general objective is to examine the effect of microfinance reforms on financial inclusion. Specifically, to determine the influence of microfinance transformation from non-deposit taking into a deposit-taking microfinance institutions on financial inclusion, to examine the association between microfinance board characteristics and public trust, to investigate the effect of microfinance licensing requirements on financial inclusion and to examine the effect of microfinance prudential standards requirements on financial inclusion in Kenya. The research adopted Financial Intermediation Theory and Public Interest Theory of Regulation. This research utilized descriptive research design and the population targeted included all the thirteen Microfinance institutions, which were licensed by the central bank of Kenya as at 2018. The study used purposive sampling to select six microfinance banks. Both descriptive and inferential statistics were done by use of multiple linear regression analysis. The research results indicated that microfinance transformation (pvalue=0.001), board characteristics (pvalue=0.042), licensing requirements (pvalue=0.035) and prudential standards (pvalue=0.002) significantly influenced financial inclusion. Results from regression analysis indicated a strong relationship between microfinance transformation, board characteristics, licensing requirements and prudential standards and financial inclusion. The study concluded that financial inclusion in micro financial institutions increases when there is sound microfinance transformation, board characteristics, legal requirements, and prudential standards. From the findings, the study recommended that micro financial institutions should support institutions reform functions and processes. Further the study recommended that micro financial institutions should recruit adequate and proficient workers and offer satisfactory training as well as certification for professional appreciation on strategies for microfinance reform processes and their influence on the financial inclusion of the micro financial institution. The research recommends that board members should be reliable and open so as to substantially contribute to financial performance.

Ce travail de recherche explore le rôle de la microfinance dans la promotion de l'entrepreneuriat à Madagascar, en mettant l'accent sur son impact sur les petites et moyennes entreprises (PME). Il part du constat que les pays en développement, comme Madagascar, sont confrontés à des défis économiques, sociaux et de pauvreté importants. L'entrepreneuriat est considéré comme un levier essentiel pour relever ces défis, mais il est souvent entravé par des contraintes financières. D’où la problématique de savoir Comment les offres microfinances pourraient-ils être un levier de développement de l’entreprenariat ? Ainsi, l'étude examine les facteurs qui influencent la décision des entrepreneurs de recourir aux services de microfinance, les caractéristiques distinctives des institutions de microfinance à Madagascar et leur impact sur la création et l'exploitation d'opportunités entrepreneuriales, afin de pouvoir vérifier que l'efficacité des prêts de microfinance dans la promotion de l’entreprenariat dépend de la synchronisation des offres aux besoins spécifiques des entrepreneurs.

The global expansion of the microfinance sector demands new conceptual work that recognizes microfinance's simultaneous imbrication in profit-oriented global finance and socially oriented development programs. Drawing from our respective areas of specialization in Latin America and South Asia, and an extensive review of the literature, we posit here that microfinance is best understood as a global industry, with traceable value chains. Microfinancial value chains are vertically organized by hierarchical relations of power, and populated by diverse actors performing various forms of gendered and class-stratified labor. Our conception of microfinance draws attention to the industry's reliance on the devalued labor of women, and the influence of class and geographic divisions on the functioning of microfinancial chains at all levels. Our chain-oriented conceptualization disrupts prevailing paradigms for studying microfinance by allowing us to analyze exactly where, and under what conditions, value is extracted across multiple global sites.

This study aims to develop and propose an Islamic microfinance model that can be used for poverty alleviation in Pakistan. Other than investigating poverty, other interrelated aspects were also considered in which entrepreneurship, conventional microfinance, and Islamic finance were included. Moreover, by moving beyond and further exploring, this research presents various uses of Islamic microfinance to reduce poverty. A set of primary data was collected through interviews to carry out this research. Initial findings of the study unveil that poverty exists concerning common perceptions such as lack of necessities, unemployment, poor health, and insufficient financial resources. However, child selling, unethical ways of earning such as begging, robbery, and incompetency of the skilled person were the findings representing poverty from totally different perspectives. Moreover, the studied results also reveal that few respondents were aware of the concept and use of conventional microfinance. Still, at the same time, all the respondents represented the forbiddance of interest. Findings also represent the unawareness about Islamic microfinance's concepts, practice, and importance. This research is helpful as it presents the idea and the use of Islamic microfinance for the impoverished people of Pakistan and how it can be a beneficial alternative for reducing poverty. Moreover, it also seeks the attention from the financial institutions in the Country that how the beliefs and expectations of poor people are important in reducing their poverty. The significance of this study broadens the scope of the neglected concept of Islamic finance generally and Islamic microfinance particularly.

Microfinance has found itself at the center of development agenda for many a developing economy struggling to reduce poverty and spur economic growth by containing unemployment. This is based on the assumption that if marginalized people can access cheap loans, they could easily create micro enterprises and lift themselves out of poverty. This thesis investigates the effect of microfinance as a mode of financial inclusion in the East-African economy. Using 2 essays, we pose various research questions to achieve our overall objective 1) what are the themes arising from two decades of research in each of the three countries and what are the gaps in literature from the region? 2) How do existing modes of financial inclusion in East-Africa affect microfinance? Is microfinance necessary in light of on-going over indebtedness crisis? 3) How has microfinance helped marginalized individuals such poor women create sustainable enterprises? The study is modeled on human and social capital theories and will employ the use regressions to test the hypotheses and make recommendations.

Microfinance offers one way to combat poverty by providing access to credit and financial services to low-income borrowers. We argue that the interconnectedness of the socioeconomic and ecological system as well as the reliance on ecosystem services make it important to provide microcredit from a full sustainability perspective. We used the Framework for Strategic Sustainable Development, a scientific based systematic and strategic approach, to create a principle-based model of a microfinance institution operating in a socioeconomic and ecologically sustainable manner. This model was then compared with the circumstances in which these institutions currently operate. We then explored how taking a full sustainability perspective could meet current challenges and maximise opportunities. After a prioritisation process, we made recommendations on how these organisations could strategically move towards sustainability.

Microfinance institutions (MFIs) may be flourishing in commercial terms but few are profitable. While MFIs in other regions have consistently reported positive profits, those operating in Africa continue to post negative profits. What explains this disparity? This thesis contributes to the current state of knowledge and research on microfinance profitability by investigating the potential determinants of MFIs profitability with a focus on Africa. Further empirical work is carried out to examine: (i) profit persistence and the speed of convergence; (ii) impact of financing choice on microfinance profitability and (iii) the impact of institutional environment of the host economy where MFI is located on profitability. This thesis is pioneering in using System-GMM estimators in studies of determinants of microfinance profitability which enables us to control for possible endogeneity. The analytical framework uses an unbalanced panel dataset comprising of 210 MFIs across 32 countries operating from 1997 to 2008. Our main estimations show that MFI profitability is non-negligibly driven by MFI specific factors and the institutional environment of the host country. Specifically, average profitability is higher in MFIs that are efficient, well-capitalized and with scale advantages. A key result is that macroeconomic environment is not significant in explaining microfinance profitability.

Remittances (money sent home by migrants) to developing countries are estimated to have reached US$ 325 billion in 2010 (World Bank, 2011). These amounts reflect only officially recorded transfers, transferred through formal channels and calculated as the sum of three items of the Balance of Payments Statistics, namely: compensation of employees, workers’ remittances and migrants’ transfers (Salomone, 2006; Aggarwal et al. 2011). Unrecorded remittances could represent 50 to 100% of recorded flows (World Bank, 2006; Hagen-Zanker and Siegel, 2007).

Remittances are three times the size of official development assistance (ODA) and the second source of external funds after foreign direct investment (FDI) for developing countries. Given their weight in receiving countries’ economies and household livelihood in many developing countries (for instance, remittances flows represent more than 25% of Lesotho’ and Moldavia’s gross domestic product in 2008), there is increasing policy and research interest in remittances as development resource. Furthermore, unlike FDI and ODA, remittances have the particularity to be directly affected to families, even those in remote areas, where development funds don’t arrive (Shaw, 2006). The thesis addresses the relationship between microfinance and the impact remittances have on domestic investment in developing countries.

Like other sources of external finance, remittances allow the economy to invest in human and physical capital (health, education), which contribute to growth (Ziesemer, 2006; Acosta et al. 2008). However, as remittances may be either directly consumed (remittances allow households to smooth their consumption, see for instance Lucas and Stark, 1985 and Glytsos, 2005) or used to invest in physical and human capital, it appears that their impact on domestic investment is perceived to be low or limited, given the amount of money they represent each year. According to literature, this is due to the small share that is dedicated to the launch or the support of economic activities. Actually, the allocation between consumption and investment, which depends on various factors such as the level of dependence households have with remittances, the migrant gender, and the existence of a credit constraint, varies on average around 10-20% of remittances that are not directly consumed (Salomone, 2006; Sorensen, 2004; Orozco, 2004). In the thesis we focus on the share of remittances that is saved and wonder how to maximize its impact, whatever this share. We are interested in the role of microfinance institutions, as actors of the financial sector, on this issue. Actually, two recent contributions, Mundaca (2009), and Giuliano and Ruiz-Arranz (2009), stress the role of the development of the financial sector. More precisely, the thesis focuses on a set of questions or issues that may be important for the microfinance industry to consider when interested in remittances flows and the deposits they may generate.

Financial development is generally defined as “increasing efficiency of allocating financial resources and monitoring capital projects, through encouraging competition and increasing the importance of the financial system. In other words, the development is about structure, size and efficiency of a financial system” (Huang, 2006). A large line of research work provides evidence that development of a financial system is a key driver of economic growth.

King and Levine (1993) argue that greater financial development increases economic growth. Levine and Zervos (1993) shows that growth is related to stock market activity, among other variables. Levine (1999) finds a significant effect of determinants of financial intermediation on economic growth. Beck et al. (2004) find strong evidence in favor of the financial-services view which stresses that financial systems provide key financial services, crucial for firm creation, industrial expansion, and economic growth. Levine (1997), Levine et al. (2000), and Beck et al. (2000) also stress the impact of financial development on growth. There is also an empirical literature that argues that the expansion and the deepening of the financial system lead to higher investment (see for instance Rajan and Zingales, 1998; Demirgüç-Kunt and Macksimovic, 1998).

By providing financial services to people whom traditionally do not have access to financial institutions, microfinance institutions (MFIs) may contribute to increasing the size of the financial system in many developing countries. Actually, according to the CFSI’s 2011 report, the one thousand-plus MFIs that report to the Microfinance Information eXchange (MIX) have 88 million borrowers and 76 million savers. Total assets of these MFIs amount to US$ 60 billion (CFSI, 2011).

The quite recent literature on remittances, financial development and growth can be categorized under two main approaches (Brown et al. 2011). One approach explores the relationship between remittances and financial development, with a view to assessing their impact on the level of financial development in receiving countries. The underlying argument is that remittances potentially contribute to financial development through both demand- and supply- side effects: by increasing households’ demand for and use of banking services, and by increasing the availability of loanable funds to the financial sector. According to this approach which consider the direct relationship between remittances and financial development, remittances have an impact on both financial outreach and depth in receiving countries, respectively through the fostering of financial literacy among remittances receivers and through the increasing availability of funds (see for instance Gupta et al. 2009, Aggarwal et al. 2011, Brown et al. 2011).

The second approach examines the remittances – financial development relationship indirectly by investigating how the given level of financial development in a country affects the impact of remittances on growth. This growth-focused approach allows for interactions between remittances and financial development in estimating growth equations for remittances receiving countries. Within the set of studies related to this approach, two opposing positions have emerged. The first position hypothesizes that the greater availability of financial services helps channel remittances to better use, thus boosting their overall impact on growth. Remittances are seen as financial flows in search of good investment projects, and good financial institutions are needed to facilitate the channeling of remittances to such investments. In this sense, remittances and financial system are complements. This position is supported by Mundaca (2009) who find that financial intermediation increases the responsiveness of growth to remittances in Latin America and the Caribbean over the 1970-2002 period. Other few studies also argue that channeling remittances through the banking sector enhances their development impact (see for instance Hinojosa Ojeda, 2003 and Terry and Wilson, 2005).

The other position argues that remittances contribute to investment and growth by substituting for inefficiencies in credit and capital markets. Remittances provide an alternative source of funding for profitable investments by alleviating liquidity constraints. In this sense, remittances promote growth more in less financially developed countries by substituting for lack of credits from financial institutions. This hypothesis is supported by Giuliano and Ruiz-Arranz (2009) who argue that poor households use remittances to finance informal investment in poorly developed financial markets with liquidity constraints. In their study, they interact remittances with a measure of financial development in standard growth equations, for a sample of 73 countries over the 1975-2002 period. Ramirez and Sharma (2009) obtain similar results using data from 23 Latin American countries over the 1990-2005 period.

The thesis contributes to existing knowledge on this indirect, growth-focused approach. Given the two existing opposite views on remittances impact on investment and the level of financial intermediation (a high level of financial development implies a high level of financial intermediation), in the thesis we first analyze the relationship that links these variables. We then analyses questions related to microfinance institutions (MFIs), as financial intermediaries.

Our focus on microfinance is made from two different perspectives, leading to different research questions. First, from the demand or microfinance clients’ perspective, we question about the interest for them to have MFIs entering the money transfers market (through the money transfer facilities and/or financial products that may be directly linked to remittances). The underlying argument is that MFIs enter the remittances market by providing money transfer services because there is a need for such services (and for other financial services) from their (potential) clients who are remittances receivers and migrants. According to this point of view, MFIs can contribute to recycle remittances flows into the financial system by contributing to the financial inclusion of remittances receivers and migrants thanks to the supply of adapted financial products. The occurrence of this assumption can therefore be measured by considering the involvement of MFIs on the remittances market as a determinant of financial inclusion indicators. Second, from the supply or MFIs’ perspective, we question about the rationale for MFIs to enter the remittances market. Here, the underlying argument is that MFIs are interested in operating on the remittances market because working with migrants can potentially contributes to the improvement of their financial and social performances. According to this perspective, remittances market opportunities as well as MFIs’ characteristics will determine the offer of money transfer services by MFIs. This supply approach therefore leads to the consideration of money transfers activities in MFIs as depending on remittances market opportunities and institutional variables.

Therefore, our papers related to microfinance will be articulated around these two questions (interest for clients and rationale for MFIs to have MFIs operating on the money transfers industry) by focusing, as argued earlier, on the deposits resulting from remittances flows.

As a matter of facts, by studying the relationship between microfinance and remittances respectively through the demand and the supply perspective, we raise causality issues related to MFIs’ money transfer activities and their impacts on MFIs performances. Actually, MFIs’ characteristics such as the right to collect public savings, as a potential source of efficiency gains, may significantly determine the supply of a money transfer service (MFIs’ perspective), while a money transfer service may itself be the determinant of some MFIs’ performance indicators related to financial inclusion, such as the volume of deposits made by clients (demand approach). However, given currently existing data on MFIs’ involvement on the remittances market we cannot consider simultaneously both perspectives in order to implement causality treatment techniques. Actually, the indicator of MFIs’ involvement we will use in our regressions is time invariant, therefore we are not able to build instrumental variables for instance (such as lagged values of our variable of interest) to eliminate econometric issues in our regressions. Nevertheless, through these two approaches taken separately, we contribute to some extend to the knowledge by putting in perspective different issues at stake for the microfinance industry.

Before we tackle our research questions we have an introductory chapter related to remittances flows: what are their trends, determinants and characteristics? The chapter also includes the definition of money transfer activities that we will use in the thesis, as well as an overview of MFIs’ involvement on the money transfers market.

Then, our research framework is divided into 4 sub-questions. The first one, treated in Chapter 2, is about the relationship between our variables of interest. What is the impact of the financial sector development (FSD) on the remittances’ impact on investment? This chapter aims at stressing the relationship existing between financial intermediation and remittances’ impacts on investment, which motivated our focus on MFIs (as financial intermediaries between remittances and the formal economy) in the following chapters. We focus on two transaction costs that decline with FSD. The first is the “Cost of Bank Depositing”, henceforth CDEP, which measures the difficulties of savers, particularly the less well-off, of depositing their savings in the formal banking system. The second transaction cost is the “Cost of External Finance”, henceforth CEXF, which measures the marginal cost for the banking system of borrowing in global financial markets. This cost is notably associated with the robustness of the country’s financial sector. In a stylized model of the lendable funds market, we analyze how both these variables affect the marginal effect of remittances on investment. We test model’s propositions using country-level data on remittances, investment, and proxies for both CDEP and CEXF, on a sample of 100 developing countries. We perform empirical tests using both cross-section and panel-data with country fixed effects, over the period 1975-2004. The results demonstrate, theoretically and empirically, that remittances and ease of access to the banking sector act as complements to stimulate domestic investment, while remittances and external borrowing are substitutes. We find that remittances flows stimulate local investment, as a part of remittances indeed become banks’ deposits, which increases the availability of lendable funds, reduces the interest rate and stimulates investment. In terms of policy implication, results suggest that enhancing financial sector development is crucial as it allows remittances to better fuel domestic investment. This is even truer when the access to international funds is difficult or costly. Improving the financial inclusion of remittances receivers by developing domestic banks’ ability to collect their savings is then a straightforward recommendation to policymakers who want to improve remittances impact on investment.

The second question, developed in Chapter 3 is related to the demand perspective of the relationship between microfinance and remittances. We want to assess whether there is a need from remittances receivers for financial products that may be linked to remittances. We aboard this question by assessing whether the supply of MTA leads to higher volume of deposits mobilized by MFIs, meaning that MFIs actually contribute or succeed in turning remittances into deposits. Using an original database of 114 MFIs –operating in Latin America and the Caribbean (LAC), South Asia (SA), East Asia and the Pacific (EAP), and Africa–, we perform empirical tests to study whether MFIs are able to capture migrants’ savings thanks to their money transfer activity. We test the impact of money transfer activity on deposits, using the natural logarithm of deposits as explained variable. Our main result suggests that money transfer activity has a significant positive impact on savings collection. MFIs involved in the remittances market thus attract more savings than MFIs that are not involved in it, probably coming from migrants and remittances receivers who are in need of adapted financial services. This confirms the opportunity MFIs may represent as a tool or a channel to improve remittances impact on investment. In that sense, MFIs should then be encouraged to operate on the remittances market, and to design financial products dedicated to migrants and remittances receivers.

The third question, developed in Chapter 4, is related to the supply approach of the relationship between remittances and microfinance. More precisely, we try to identify factors that seem to explain the availability of such service in the scope of services provided by MFIs. In this chapter, we focus first on potential sources of efficiency gains linked to the money transfer activity as a rationale for diversification (i.e. the expansion of the offer). And second, using an original database of 435 MFIs –operating in Latin America and the Caribbean (LAC), South Asia (SA), East Asia and the Pacific (EAP), and Africa–, we perform empirical tests using cross-section over the year 2006, to identify which environmental and institutional parameters have an impact on the willingness of a MFI to provide a money transfer service. We test the impact of various variables that are related to one of the rationale for MFIs to enter the money transfer market, namely economies of scale and scope as a source of efficiency gains, on the probability to have a money transfer service provided by a given MFI. Our main result suggests that the size, as well as the fact that an MFI collects savings have a positive and significant impact on this probability, while the level of financial development negatively impact it. This confirms among other things that the ability to realize economies of scale through a potential increase of collected deposits may be a determinant of managers’ choice to diversify. Policies that contribute to reduce entry barriers in low financially developed countries should then, among other things, be encouraged to have MFIs fully playing their role of intermediaries between remittances and the (formal) economy.

The chapter 5 questions about the institutional consequences for MFIs to collect migrants’ savings. The aim of this chapter is to give an insight on the opportunity migrants’ money (including remittances) could represent for the microfinance industry as a source of stable medium- and long-term funds. It is therefore related to the supply approach and the motivation for MFIs to enter the remittances market by analyzing the impact of migrants’ deposits (which include remittances) on another potential source of efficiency gains, namely the internal capital market. Through a case study approach, this chapter is devoted to the analysis of funding risk in microfinance, comparing migrants’ and locals’ time deposits. Migrants’ time deposits are expected to be of longer term and more stable (in terms of early withdrawals) than locals’ deposits. This assumption had never been tested yet. Based on an original database of 7,828 deposit contracts issued between 2002 and 2008 by 12 village banks belonging to a major Malian rural microfinance network (PASECA-Kayes), we used the Cox proportional hazard model to identify the variables that have an impact on the probability to have early withdrawals, and the technique of re-sampling to calculate withdrawal rates and deposits at risk. Results from the Cox methodology suggest that the migration status is not a direct determinant for the probability to have an early withdrawal. However, this probability increases with the amount deposited and the term of the contract which are both higher for migrants compared to non-migrants. The re-sampling method results suggest that withdrawal rates are not the same for the two categories of depositors observed. We find higher withdrawal rate distributions for migrants than for locals. The value at risk is also higher on migrants’ deposits than on locals’ deposits. However, as migrants tend to deposit for longer term than locals, through the calculation of durations we have measured to which extend migrants’ deposits still have a positive impact on MFIs’ liabilities. It appears that migrants’ money has a marginal but positive impact on time deposits durations, either when considering early withdrawals, which impacts are very limited, except in 2007 (the worst year in terms of amount withdrawn early). As our results show that MFIs that receive migrants’ deposits are not necessarily better-off than without migrants’ money in terms of funding risk - and durations - this paper has stressed the importance of assessing more carefully the role of migrants for the microfinance industry.

Doctorat en Sciences économiques et de gestion
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In the introduction of the master thesis, the historical development and the reasons for the emergence of microfinance are described. The thesis focuses on comparison of the functioning of microfinance in various developing regions of the world, as well as on the analysis of the overall functioning, effectiveness, strengths and weaknesses, potential threats and opportunities in the microfinance markets. The conclusion offers several possibilities and insights on how microfinance could be more efficient in financial terms. The thesis also presents a brief evaluation of the benefits of microfinance and based on findings provides a prediction of further development of microfinance.

Inspired by the 1999 Program of Action defined by the United Nations, which describes eight pragmatic areas for a Culture of Peace. My proposal will work on the section 'Sustainable economic and social development' evaluating microfinance and the organizations that manage them, as a tool to achieve this objective. Immersed in a global context and under the prism of sustainability, the performance analysis of the organizations activity can not be done only from its economic exercise, but it is necessary to measure its impact under a wider range of criteria (Fernández et al., 2013). The main objective of this thesis will be to contribute to the improvement of research in this sector, presenting a global vision of the behaviour of MFIs in terms of sustainable performance, based on a model that articulates the financial, environmental, social and governance dimensions of integrated form.
Inspirado en el Programa de Acción de 1999 definido por Naciones Unidas en el que se describen ocho ámbitos pragmáticos para una Cultura de Paz. Mi propuesta trabajará sobre el apartado ‘Desarrollo económico y social sostenible’ evaluando las microfinanzas y las organizaciones que las gestionan, como herramienta para la consecución de este objetivo. Inmersos en un contexto global y bajo el prisma de la sostenibilidad, el análisis de desempeño de la actividad de las organizaciones no puede realizarse únicamente desde su ejercicio económico, sino que es preciso medir su impacto bajo una mayor amplitud de criterios (Fernández et al., 2013). El principal objetivo de esta tesis será contribuir a la mejora de la investigación de este sector, presentando una visión global del comportamiento de las IMFs en términos de desempeño sostenible, basado en un modelo que articule las dimensiones financiera, ambiental, social y de gobernanza de forma integrada.

The poor need a range of financial services to cope with shocks, to manage day-to-day transactions, and to grasp business opportunities, among others. To be successful in reaching the poor, microfinance institutions should offer products that meet the poor’s needs. Product design, therefore, is becoming a very important topic. “Behavioral” product design pinpoints the importance of individuals’ behavioral anomalies, such as procrastination behavior and lack of self-control. Financial products are seen as commitment devices to help individuals diverting money from immediate consumption to savings and investment.

This doctoral thesis contributes to this recent research stream by first surveying the literature on product design in microfinance, and then providing an empirical and a theoretical contribution. Precisely, the thesis is structured in four chapters. Chapter 1 and Chapter 2 are both reviewing the literature. Chapter 1, titled “Product Flexibility in Microfinance: A Survey”, reviews the academic literature on product flexibility in microfinance and offers a categorization scheme of flexible microfinance products. Chapter 2, titled “Innovative Flexible Products in Microfinance”, scrutinizes nine real-life practices covering microcredit, micro-savings and micro-insurance services that mix flexible features and commitment devices. Chapter 3, titled “The Debt Puzzle in Dhaka’s Slums: Do Liquidity Needs Explain Co-Holding?”, examines the use of flexible savings-and-loan accounts by SafeSave’s clients and tests whether the need for liquidity explains why the poor save and borrow simultaneously. Lastly, Chapter 4, titled “Having it Both Ways: A Theory of the Banking Firm with Time-consistent and Time-inconsistent Depositors,” proposes a theoretical model to determine the liquidity premium offered by a monopolistic bank to a pool of depositors composed of time-consistent and time-inconsistent agents.
Doctorat en Sciences économiques et de gestion
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Thesis (Ph.D.)--Massachusetts Institute of Technology, Dept. of Economics, 2002.
Includes bibliographical references.
Chapter one is titled "Social Capital and Group Banking." Lending to the poor is costly due to high screening, monitoring, and enforcement costs. Group lending advocates believe individuals are able to select creditworthy peers, monitor the use of loan proceeds, and enforce repayment better than an outside lending organization can by harnessing the social capital in small groups. Using data collected from FINCA-Peru, I exploit the randomness inherent in their formation of lending groups to identify the effect of social capital on group lending. I find that having more social capital results in higher repayment and higher savings. I also find suggestive evidence that in high social capital environments, group members are better able to distinguish between default due to moral hazard and default due to true negative personal shocks. Chapter two is titled "Can Games Measure Social Capital and Predict Financial Decisions." Economic theory suggests that market failures arise when contracts are difficult to enforce or observe. Social capital can help to solve these failures. Measuring social capital has become a great challenge for social capital research. I examine whether behavior in a trust game predicts future financial behavior. I find that trustworthy behavior in the game predicts higher loan repayment and savings deposits, whereas more trusting behavior predicts the opposite. Analyzing General Social Survey responses to questions on trust, fairness and helping others, I find that those with more positive attitudes towards others are more likely to repay their loan.
(cont.) Chapter three is titled "When Curiosity Kills Profits: An Experimental Examination." Economic theory predicts that under Bertrand competition, with equal and observable costs, firms earn zero profits. Theory also predicts that if costs are not common knowledge, firms should use their weakly dominant strategy of pricing above marginal cost and earn positive profits. Hence, rational profit-maximizing Bertrand firms should prefer less public information. In an auction game, we find that individuals without information on each other's valuations earn more profits than those with common knowledge. Then, given a choice between the two rules, half the individuals preferred to have the information. We discuss possible explanations, including ambiguity aversion.
by Dean S. Karlan.
Ph.D.

Microfinance Institutions (MFIs) now reach 200 million people, mostly women without access to mainstream financial services living on, below and around the poverty line, with offers of small loans. The vast majority have as their twin objectives to alleviate their borrowers’ poverty and to enhance their empowerment. The paradox of microfinance is that a number of the practices used to achieve its objectives have the unintended consequence of undermining them. The concept that links the objectives of MFIs and the dangers in its practices is the relationship microfinance has with a borrower’s autonomy. The MFI intends that the loan increase autonomy by enriching and empowering the borrower. Its practices, however, can easily lead to charges of exploitation, coercion and paternalism, although in the latter case it is also argued that in certain areas they are not paternalistic enough. It is argued that these latter concepts are considered wrongful, when they are, just because of how they relate to autonomy. The structure of the thesis is thus to consider the concepts of exploitation, coercion, and paternalism and then apply these concepts to the practices of microfinance. The thesis concludes with an empirical survey of how far microfinance has in fact achieved its objectives of poverty reduction and empowerment, in order to judge whether the infringements on autonomy incurred in its practice can be justified. It then considers the extent to which the way the benefits and burdens of microfinance fall - those whose lives do indeed go better or worse after engaging with microfinance, and by how much - affects our judgement as to whether microfinance should be supported. Finally suggestions are made as to changes to practices that could be made so as to keep the pursuit of the ethical objectives, but minimise the risk of unethical practice in fact.

Microfinance is of a vital importance to the unprivileged people especially in the developing countries. People with no means of sustaining themselves, rely on microfinance for a variety of services as a means for poverty reduction and increasing happiness. This study employs a Fixed Effects Model to analyze the impact of microfinance and some other macroeconomic factors on poverty reduction in Albania, Montenegro and Bosnia and Hercegovina. Empirical findings suggest that inflation does not play a role on the poverty reduction. On the other hand, total output (GDP) and microfinance (GLP) are found to be highly statistically significant in explaining the poverty reduction in the respective countries. Therefore, putting serious efforts on increasing GDP and supporting microfinance institutions may help the countries reduce the poverty level. Keywords: Western Balkans, microfinance, GDP, poverty reduction, fixed effects model

Nowadays, the microfinance market is growing rapidly. Microfinance is becoming more common in the Kyrgyzstan market, complementing the traditional banking segment. However, how much microfinance affected the poverty is a subject for debate. Giving low income household money may lift them out of poverty for a short period of time but when the credit is spent borrowers fall back into poverty. The aim of the study was to analyze the impact of microfinance practices on poverty in Kyrgyzstan. The data were obtained from 521 microfinance clients in all districts and two largest cities. These are: Chuy, Naryn, Talas, Jalal Abad, Osh, Batken districts and Osh and Bishkek cities. A logit regressional analysis was used to determine the variables that affected poverty in Kyrgyzstan.

Although the share of microfinance institutions in financial sector of Transition Economies are increasing, the level of interest rates charged by microfinance institutions are very high than normal bank interest rates. Because in these countries the main reasons of high interest rates are operational cost, funding costs, credit risk, inflation and target profit of MFIs. The main purpose of this paper is to analyze the effect of efficiency on interest rate in microfinance system of sampled transition economies. This study uses MIX data that runs from 2000 to 2014 for transition economies countries. The efficiency of microfinance institutions in sampled transition economies measured by applying Stochastic Frontier Approach. The impact of efficiency on interest rate will be analyzed using fixed effects and random effects panel data models.

Microfinance has played an important role in poverty alleviation throughout the developing world. Though some Central Asian countries are blessed with abundant natural resources, uneven income distribution and poverty are prevalent. Microfinance, however, has not been much in the public discussion in the region. The aim of this paper is to take stock of microfinance in Central Asia; to review recent developments in the context of the global development in the sector; to assess the regulatory and supervisory environment; and to identify untapped potential with respect to the future development of the industry.

In conditions of deep global crisis, microfinance is considered to be one of the most adaptable financial instruments to the needs of small and medium-sized enterprises. This form of financial support for small enterprises in the form of microfinance organizations is highly relevant for the economy of the geographical region, the stability and scale of the activities of existing companies in this area. In this context, the authors, in addition to highlighting the momentary gaps in this segment of the economy activity, but also identify a number of proposals with regard to the management of credit risk and over-indebtedness risk, these are identified as the most urgent probable risks of the microfinance market, both in the Republic of Moldova and internationally.

Les débats sur les impacts des programmes de microfinance sont continus. Deux courants théoriques y sont opposés : le welfarisme et l’institutionnalisme. Les insuffisances du dualisme welfarisme et institutionnalisme ne permettent pas d’analyser les effets financiers des programmes de microfinance sur les microentreprises. Dans cette recherche, nous proposons un nouveau modèle d’analyse basé sur les déterminants de la performance des microentreprises. Ce modèle tient compte des conditions de microfinancement élaborées par les organisations de microfinance et les pratiques de gestion dans les microentreprises. La question étudiée est la suivante : les conditions de microfinancement greffées sur des pratiques de gestion des emprunteurs sont-elles favorables à la performance économique des microentreprises ? Notre hypothèse est que vu la faiblesse des pratiques de gestion des emprunteurs, les conditions de microfinancement ont des effets d’appauvrissement sur des microentreprises. En vue de tester cette hypothèse, nous proposons tout d’abord un nouveau modèle destiné à être expérimenté à travers l’analyse d’un programme de microfinance haïtienne, à partir d’enquête auprès d’un échantillon aléatoire de bénéficiaires, dans les communes de Port-au-Prince et Miragoâne.

This paper aims to reveal some basic trends in the financing of microfinance institutions, such as where the financing comes from, and how the distribution changes over time. The paper does not claim to be a comprehensive review of this topic, but it offers some new information and points to some previously unexplored patterns. The paper also identifies and examines key emerging issues that face the increasing number of transformed microfinance institutions, including access to capital markets, greater reliance on foreign currency liabilities and the search for additional equity.

This presentation was commissioned by the Poverty Reduction and Social Protection Network of the Regional Policy Dialogue for the IV Hemispheric Meeting celebrated on November 11th and 12th, 2002. Increases in incomes and investment in assets. Reduction of vulnerability: increased ability of the poor to cope with shocks and economic stress events. Improved personal financial management.