comment on how foreign participation and market concentration impact bank spreads evidence from latin america during most of the 20th century latin american banking systems tended to be small inefficient and highly concentrated most were also characterized by regulatory barriers to entry one component of these regulatory barriers was restrictions on the entry of foreign banks beginning in the early 1990s most of the barriers to foreign investment in banking were lifted and over time foreign banks have come to play an increasingly larger role in most latin american financial systems foreign banks now control roughly 45 of all latin american bank assets this change in ownership structure poses an interesting question for both academics and policy makers what effect did the entry of foreign banks have on the spreads charged by banks did foreign banks increase competition and produce administrative innovations that reduced the gap between what banks paid for funds and charged for loans or did the entry of foreign banks increase concentration thereby allowing banks to behave less competitively answering this question requires careful econometric analysis at the same time that foreign banks were entering both creating de novo operations and purchasing existing banks domestic banks were also merging with one another thus independent of foreign bank entry there was also an increase in concentration in order to measure the independent impact of foreign bank entry we need to be able to separate

competition and microfinance abstract competition between microfinance institutions mfis in developing countries has increased dramatically in the last decade we model the behavior of non profit lenders and show that their non standard client maximizing objectives cause them to cross subsidize within their pool of borrowers thus when competition eliminates rents on profitable borrowers it is likely to yield a new equilibrium in which poor borrowers are worse off as competition exacerbates asymmetric information problems over borrower indebtedness the most impatient borrowers begin to obtain multiple loans creating a negative externality that leads to less favorable equilibrium loan contracts for all borrowers

board size and diversity as governance mechanisms in community development loan funds in the usa community development loan funds cdlfs in the us help revitalize low income communities by providing financial services to underserved populations this article uses recently available data from several surveys to explore the link between performance and board size and diversity given the unique nature of cdlfs specific hypotheses are formulated based on insights from the literature on governance in banks and nonprofit institutions to capture the cdlfs multiple objectives the article adapts an empirical approach used to study governance in banks the results show that efficiency improves as the board size increases up to 13 members the results also suggest that gender diversity has a positive impact while racial diversity is associated with a negative but negligibly small impact

non manipulable division rules in claim problems and generalizations abstract when resources are divided among agents the characteristics of the agents are taken into consideration a simple example is the bankruptcy problem where the liquidation value of a bankrupt firm is divided among the creditors based on their claims we characterize division rules under which no group of agents can increase the total amount they receive by transferring their characteristics within the group by allowing agents characteristics to be multi dimensional and choosing the meaning of variables appropriately our model can subsume a number of existing and new allocation problems such as cost sharing social choice with transferable utilities income redistribution bankruptcy with multiple types of assets probability updating and probability aggregation a number of existing and new results in specific problems are obtained as corollaries

microfinance literature a sustainability level perspective survey abstract since the early microcredit programs up to the present microfinance has grown exponentially as it has the academic interest on it as a research subject considering that this sector has impact in terms of sustainability any research in the field requires an analysis with wide criteria which should include the economic environmental social and governance dimensions eesg as well as their interrelationships the objectives of this survey are to investigate the contributions of microfinance sectoral scholarly research to sustainability through a systematic literature review using content analysis method contextualizing the scientific production and studying its terminology according to the eesg criteria and under global reporting initiative framework and finally to identify research gaps and to propose future research paths

an axiomatic approach to systemic risk systemic risk refers to the risk of collapse of an entire complex system as a result of the actions taken by the individual component entities or agents that comprise the system systemic risk is an issue of great concern in modern financial markets as well as more broadly in the management of complex business and engineering systems we propose an axiomatic framework for the measurement and management of systemic risk based on the simultaneous analysis of outcomes across agents in the system and over scenarios of nature our framework defines a broad class of systemic risk measures that accomodate a rich set of regulatory preferences this general class of systemic risk measures captures many specific measures of systemic risk that have recently been proposed as special cases and highlights their implicit assumptions moreover the systemic risk measures that satisfy our conditions yield decentralized decompositions i e the systemic risk can be decomposed into risk due to individual agents furtherm

formal microlending and adverse or nonexistent selection a case study of shrimp farmers in bangladesh microcredit schemes have become a popular means of improving smallholders access to credit and making long term investment possible however it remains to be explored whether the current microcre

dea and sfa research on the efficiency of microfinance institutions a meta analysis microfinance has played a key role in the fight against exclusion and the promotion of entrepreneurship in developing countries an important question today is how to increase the reach and profitability of microfinance in a context where subsidies are withdrawing to promote the viability and sustainability of microfinance institutions mfis efficiency analysis has found favor in this context and has attracted growing interest among professionals partners and researchers abundant empirical work has been conducted over the last ten years on this subject in very different contexts and with different methodologies the purpose of this article is to provide a meta regression analysis on parametric and nonparametric estimations of mean technical efficiency mte in microfinance using a data set of 262 observations from 38 studies the results show that in the microfinance industry mte scores have increased over time however with an mte rate of approximately 61 1 there is room for improving efficiency mfis use more resources than necessary for the results achieved in terms of outreach and revenue generated our results show heterogeneity of mte according to the methodological approach of the studies studies with a larger number of variables inputs and outputs produced higher mte scores than did those with a smaller number of variables studies using the variable returns to scale assumption resulted in higher mte scores than those using constant returns to scale in addition those with a production approach had higher mtes than did those using the intermediation approach while studies of a large number of mfis had lower scores than did those involving a small sample size moreover research estimating social efficiency generated lower mtes compared to those estimating financial efficiency studies using data from african mfis obtained lower mtes than did those on mfis in latin america and mena which confirms the poor performance of african microfinance

microfinance its impact outreach and sustainability summary this symposium brings together recent empirical contributions with respect to a number of related and highly relevant issues on the economics of microfinance in particular the contributions provide answers to the following two main questions 1 does microfinance have an impact on the social and economic situation of the poor in developing nations and 2 are microfinance institutions sustainable in the long term and is there a trade off between sustainability and outreach

do regulated microfinance institutions achieve better sustainability and outreach cross country evidence in spite of increasing pressure on microfinance institutions mfis operating in developing countries to transform into regulated financial intermediaries to date no study has investigated whether regulated mfis actually achieve better financial results and reach more poor clients than nonregulated mfis this article explores the impact of regulation on mfi performance using newly released data for 114 mfis from 62 countries in an empirical model where performance is specified as a function of mfi specific regulatory macroeconomic and institutional variables consistent with recent cross country evidence on the impact of banking regulations on bank performance barth et al 2004 this article finds that regulatory involvement does not directly affect performance either in terms of operational self sustainability or outreach the article also finds that less leveraged mfis have better sustainability the policy implication is that mfis transformation into regulated financial institutions is may not

the impact of ethnic diversity on microenterprise start ups until recently factors determining the decisions made by microfinance institutions mfis to extend loans to business start ups had not been explored recent evidence shows that mfi performance wi

decentralized clearing in financial networks we consider a situation in which agents have mutual claims on each other summarized in a liability matrix agents assets might be insufficient to satisfy their liabilities leading to defaults in case of default bankruptcy rules are used to specify the way agents are going to be rationed a clearing payment matrix is a payment matrix consistent with the prevailing bankruptcy rules that satisfies limited liability and priority of creditors since clearing payment matrices and the corresponding values of equity are not uniquely determined we provide bounds on the possible levels equity can take unlike the existing literature which studies centralized clearing procedures we introduce a large class of decentralized clearing processes we show the convergence of any such process in finitely many iterations to the least clearing payment matrix when the unit of account is sufficiently small all decentralized clearing processes lead essentially to the same value of equity as a centralized clearing proce

household sectoral choice and effective demand for rural credit in india an analysis of the icrisat data from three indian villages raises concern about the extent of rationing mechanism inhibiting the spread of formal credit in rural india where a significant proportion of households do not have any outstanding loan or borrow from the informal sector only a limited dependent econometric analysis of the factors jointly determining household sectoral choice and effective demand for informal loan conditional on whether a formal loan is available suggests that compared to formal loan easy and adequate access and prompt recovery are significant determinants of the popularity and viability of informal rural credit among sample households also some households substitute labour income to ease the extent of credit thus rationing of the formal credit is not the only factor inhibiting the spread of formal credit in the study villages

distributive justice in taxation abstract a classical criterion for apportioning taxes is that all should sacrifice equally in loss of utility suppose that a method of apportioning taxes is continuous and has the following four properties i the way that taxpayers split a given tax total depends only on their own taxable incomes ii an increase in the tax total implies that everyone pays more iii every incremental increase in tax is apportioned according to taxpayers current after tax incomes iv the ordering of taxpayers by pre tax income and after tax income is the same then there exists a utility function relative to which all sacrifice equally

the vulnerability of microfinance to financial turmoil evidence from the global financial crisis summary has microfinance become crisis prone like other sources of finance this paper provides empirical evidence on credit growth patterns of microfinance institutions in the early 2000s results suggest that microfinance has become vulnerable to financial turmoil in the global financial crisis credit growth dropped sharply moreover the crisis impact was more severe when institutions had been active in tapping domestic and international financial markets for funds and had operated in countries experiencing a severe post crisis recession finally we find that microcredit adopted the cyclical characteristics of credit growth in the traditional banking sector with credit booms followed by credit busts

an axiomatization of the proportional rule in financial networks the most important rule to determine payments in real life bankruptcy problems is the proportional rule many such bankruptcy problems are characterized by network aspects and the values of the ag

outreach sustainability and leverage in monitored and peer monitored lending abstract i study the contract design problem facing microfinance lending organizations mfos that want to maximize the impact and outreach of their lending activities to a target population of poor borrowers while remaining financially sustainable tradeoffs between outreach sustainability and financial leverage are shaped by the endogenous monitoring and delegation costs that arise within a chain of agency relationships subject to moral hazard between borrowers loan staff mfo equity owners and outside investors all else equal sustainable mfos that target poorer borrowers must charge higher interest rates have higher staff costs per dollar loaned and are less leveraged analysis of data for 72 mfos tends to support the findings

determinants of the performance of microfinance institutions a systematic review microfinance institutions mfis generally aim at improving the access of the poor to financial services while at the same time being financially sustainable but what do we know about how mfis reach and combine these two goals we carry out a systematic review of close to 170 papers discussing the determinants of the financial and social performance of mfis the review shows that the most important determinants addressed in the literature are mfi characteristics size age and type of organization their funding sources the quality of organizational governance and the mfis external context such as macro economic institutional and political conditions the evidence on these issues is rather mixed moreover the direction of the relationship between these drivers and mfi performance depends on the context particularly the country specific context finally there is a lack of consensus in the literature on the measurement of financial and social performance due to the complexity of the concept we argue that social performance should only be assessed by using a multidimensional perspective this can be done either by applying recent and holistic social performance measures such as the spi4 or at least by using a combination of proxies such as outreach gender and rural measures

outreach and performance of microfinance institutions a panel analysis using a panel of 764 microfinance institutions mfis from 87 countries this study analyses the possible trade off between outreach and performance and shows that greater depth of outreach has a positive impact on the financial performance of an mfi the empirical results of this study should dispel the widely held apprehension that the recent emphasis on attainment of financial sustainability by the mfis could seriously impair their outreach efforts and shows that outreach to the poor can actually bolster financial performance

financial efficiency and social impact of microfinance institutions using self organizing maps summary this paper contributes to the literature by investigating whether the increased focus on financial self sustainability of microfinance institutions has been disadvantageous to the target audience we investigate the association between social efficiency and financial performance using a comprehensive data set that includes 650 microfinance institutions a self organizing map methodology is used to fully capture the existing heterogeneity among institutions the results show that we cannot support the hypothesis that there exists a trade off on the contrary we find evidence of a significant positive relationship between social efficiency and financial performance

institutional framework and economic development international evidence this paper examines the effect of quality of the institutional framework on economic development our empirical results support the hypothesis that good institutions improve efficiency and accelerate growth the positive effect of institutional quality is more pronounced with mutually reinforcing support of economic freedom our results also indicate that good institutions help developing countries grow faster to achieve conditional convergence we infer from the results that economic development requires not only physical and human capital formation but also freedom to choose and institutional support

urban bias of consequences classes and causality choice theoretic accounts of urban bias ub in ldcs are popular because they also explain rural bias in richer countries such misguided elegance notwithstanding class theoretic not simply marxist productionist accounts are preferable why 1 ub alleges persistently inefficient and or unfair i anti rural outcomes ii intra rurally biases towards rural elites who in return deliver surpluses townwards 2 if ub declines for one outcome it must increase for others unless pro urban classes weaken relative to pro rural thus farm price ub fell in 1975 90 in many ldcs but with urban rural class power balances little changed public expenditure ub rose to compensate 3 yet long term development transforms such balances shifting many outcomes from ub to rural bias 4 explaining 2 and 3 involves understanding urban rural class relations when and to obtain which outcomes do rural elites seek rural rather than urban alliances choice game coalition theories help but only within i

what type of microfinance institutions supply savings products abstract recent evidence shows that the poor desperately need access to savings products but despite this general consensus microfinance institutions mfis offering savings products are still under studied using random effect probit estimation on a dataset of 722 mfis active over the 2005 2010 period we try to identify the characteristics of those that collect voluntary savings our results suggest that these mfis have received fewer subsidies than their credit only counterparts in other words subsidies would crowd out micro savings products suggesting that donors generate negative externalities on product diversification

regulations market structure institutions and the cost of financial intermediation this paper examines the impact of bank regulations market structure and national institutions on bank net interest margins and overhead costs using data on over 1400 banks across 72 countries while controlling for bankspecific characteristics the data indicate that tighter regulations on bank entry and bank activities boost the cost of financial intermediation inflation also exerts a robust positive impact on bank margins and overhead costs while concentration is positively associated with net interest margins this relationship breaksdownwhencontrolling for regulatory impediments to competition and inflation furthermore bank regulations become insignificant when controlling for national indicators of economic freedom or property rights protection while these institutional indicators robustly explain cross bank net interest margins and overhead expenditures thus bank regulations cannot be viewed in isolation they reflect broad national approaches to private property and competition

systemic risk in financial systems we consider default by firms that are part of a single clearing mechanism the obligations of all firms within the system are determined simultaneously in a fashion consistent with the priority of debt claims and the limited liability of equity we first show via a fixed point argument that there always exists a clearing payment vector that clears the obligations of the members of the clearing system under mild regularity conditions this clearing vector is unique next we develop an algorithm that both clears the financial system in a computationally efficient fashion and provides information on the systemic risk faced by the individual system firms finally we produce qualitative comparative statics for financial systems these comparative statics imply that in contrast to single firm results even unsystematic nondissipative shocks to the system will lower the total value of the system and may lower the value of the equity of some of the individual system firms

do microfinance institutions accomplish their mission evidence from the relationship between traditional financial sector development and microfinance institutions outreach and performance this article analyses the relationship between outreach and performance of microfinance institutions mfis on the one hand and traditional financial sector development on the other the results indicate that mfis reach more clients and are more profitable in countries where access to the traditional financial system is low this finding is in line with the market failure hypothesis mfis respond to a need that banks do not fulfill and mfis flourish where the formal financial sector fails along the same line the results demonstrate that mfis serve poorer people in countries with well developed financial systems the results suggest that in countries with well developed financial systems the two sectors stand in more direct competition with each other this competition pushes mfis down the market and makes mission drift by mfis less likely

which microfinance institutions are becoming more cost effective with time evidence from a mixture model italian speakers tend to stress the second component of german morphologically complex words such as compounds and prefix verbs even if the first component is lexically stressed to improve their prosodic phrasing an automatic pronunciation teaching method was developed based on auditory feedback of prosodically corrected utterances in the learners own voices basically the method copies contours of f0 local speech rate and intensity from reference utterances of a german native speaker to the learners speech signals it also adds emphasis to the stress position in order to help the learners better recognise the correct pronunciation and identify their errors a perception test with german native speakers revealed that manipulated utterances significantly better reflect lexical stress than the corresponding original utterances thus two groups of italian learners of german were provided with different feedback during a training session one group with manipulated utterances in their individual voices and the other with correctly pronounced original utterances in the teacher s voice afterwards both groups produced the same sentences again and german native speakers judged the resulting utterances resynthesised stimuli especially with emphasised stress were found to be a more effective feedback than natural stimuli to learn the correct stress position since resynthesis was obtained without previous segmentation of the learners speech signals this technology could be effectively included in computer assisted language learning software

financing microfinance institutions subsidies or deposit mobilisation abstractaccording to conventional wisdom dependence on subsidies cannot achieve the double bottom lines of microfinance institutions mfis outreach and financial sustainability the application of market based principles to microfinancing such as deposit mobilisation has been long suggested as an answer to this problem this paper documents the following findings regarding this issue first deposit mobilisation crowds out subsidies second subsidies and deposit mobilisation reduce microcredit interest rates and allow mfis to reach poorer borrowers third subsidies and deposit mobilisation worsen financial sustainability fourth subsidies reduce repayment rates while deposit mobilisation has no impact on repayment overall the results suggest that neither subsidies nor deposit mobilisation solve the traditional problem of trade off between outreach and financial sustainability

can microfinance reach the poorest evidence from a community managed microfinance intervention summary reaching the poorest is an important objective in many development interventions and microfinance is no exception we review performance indicators for effectiveness of targeting described in the literature and suggest a new metric in order to account for extent and severity of poverty as well as the income distribution among the poor when applying this to a panel dataset from a community managed microfinance intervention in northern malawi we find regressive targeting participants are less poor than the general population in the area in addition we provide suggestions as to when and why the poor exit the project

failure and rescue in an interbank network this paper is concerned with systemic risk in an interbank market modelled as a directed graph of interbank obligations this builds on the modelling paradigm of eisenberg and noe eisenberg l noe th 2001 systemic risk in financial systems management sci 472 236 249 by introducing costs of default if loans have to be called in by a failing bank this immediately introduces novel and realistic effects we find that in general many different clearing vectors can arise among which there is a greatest clearing vector arrived at by letting banks fail in succession until only solvent banks remain such a collapse should be prevented if at all possible we then study situations in which consortia of banks may have the means and incentives to rescue failing banks this again departs from the conclusions of the earlier work of eisenberg and noe where in the absence of default losses there would be no incentive for solvent banks to rescue failing banks we conclude with some remarks about how a rescue consortium might be constructed this paper was accepted by wei xiong finance

a theory of debt and equity diversity of securities and manager shareholder congruence this paper shows how the optimal financial structure of a firm complements incentive schemes to discipline managers and how the securities return streams determine the claim holders incentives to intervene in management the theory rationalizes 1 the multipucity of securities 2 the observed correlation between return streams and control rights of securities and 3 the partial congruence between managerial and equity holder preferences over policy choices and monetary rewards as well as the low level of interference of equity in management the theory also offers new prospects for a reappraisal of the earlier corporate finance literature

determinants of margin in microfinance institutions abstractmicrofinance institutions mfis lend to the poor however microfinance clients suffer from high interest rates a type of poverty penalty this article analyses the margin determinants in mfis a banking model has been adapted to microfinance this model has been tested using 9 year panel data some factors explaining bank margin also explain mfi margin with operating costs being the most important factor specific microfinance factors are donations and legal status as regulated mfis can collect deposits it has also been found that mfis operating in countries with a high level of financial inclusion have low margins

from ngos to banks does institutional transformation alter the business model of microfinance institutions microfinance which pledges to provide financial services to people without access to banking is chiefly run by non governmental organizations ngos little is known about the extent to which the transformation of these ngos into shareholder owned and most often regulated firms affects the way microfinance institutions mfis conduct their business by applying the event study methodology to 66 mfis that have transformed we quantify the effect that transformation has on the mfis business models our results suggest that portfolio yield is driven down by 3 9 percentage points due to transformation indicating that clients get more favorable interest rates at the same time mfis are able to significantly cut down their operational expenses of which 1 1 percentage points can be attributed to transformation other findings include a steep increase in commercial debt leverage and deposits a significant decrease in the fluctuation of funding costs and a sharp rise in average loan size profitability goes down in the short and medium term while return on equity is driven up in the medium to long run by exploiting within mfi data our approach goes beyond previous studies that mainly relied on between mfi data overall the results suggest that transformed mfis become an attractive environment for investors potentially encouraging a more profit seeking behavior among transformed mfis