you can t save alone commitment in rotating savings and credit associations in kenya abstract this article examines one reason why individuals develop and maintain local level financial savings organizations known as rotating savings and credit organizations or roscas economic theories suggest that individuals form roscas to finance the purchase of a lumpy durable good in response to intrahousehold conflict over savings or to provide themselves with insurance the article proposes an additional hypothesis for rosca participation saving requires discipline and some roscas may be formed to provide a collective mechanism for commitment in the presence of time inconsistent preferences data from 70 roscas located in western kenya indicate that the commitment hypothesis is plausible and broadly consistent with the design and patterns of participation in these roscas as many rosca participants put it you can t save alone

rotating and accumulating savings and credit associations a development perspective abstract financial self help groups in low income countries consist of two basic types rotating and accumulating savings and credit associations or roscas and ascras in the ascra funds are not immediately withdrawn but are left to grow for loan making comparing the two groups the author finds similarities and differences efforts to rectify the rosca s shortcomings have prompted many innovations and given birth to a hybrid preserving the best of both types in constant adaptation to changing environments

fool s gold the impact of venezuelan currency devaluations on multinational stock prices this paper documents negative cumulative abnormal returns cars to five exchange rate devaluations in venezuela within the context of stiff exchange controls and large black market premiums using daily stock prices for 110 multinational corporations with venezuelan subsidiaries the results suggest evidence of statistically and economically significant negative cars of up to 2 07 percent over the ten day event window we find consistent results using synthetic controls to causally infer the effect of each devaluation on the stock prices of global firms active in the country at the time of the event our results are at odds with the predictions of the efficient market hypothesis stating that predictable devaluations should not affect the stock prices of large multinational companies on the day of the event and even less so when they happen in small countries we interpret these results as a suggestive indication of market inefficiencies in the process of asset pricing

wage and price dynamics in china we study wage price dynamics in mainland china with a novel data set using province level data from 1994 to 2010 we find that the growth in labour costs in china is not passed through fully to final prices neither in the tradable goods sector nor in the economy as a whole this probably reflects the strong pressure on profit margins from a highly competitive environment especially in manufactured goods these findings have potential implications for global price developments given china s relevance in global supply chains

catastrophic natural disasters and economic growth this paper examines the short and long run average causal impact of catastrophic natural disasters on economic growth by combining information from comparative case studies the counterfactual of the cases studied is assessed by constructing synthetic control groups taking advantage of the fact that the timing of large sudden natural disasters is an exogenous event it is found that only extremely large disasters have a negative effect on output both in the short and long run however this result appears in two events where radical political revolutions followed the natural disasters once these political changes are controlled for even extremely large disasters do not display any significant effect on economic growth it is also found that smaller but still very large natural disasters have no discernible effect on output

credit markets in northern nigeria credit as insurance in a rural economy this article addresses the issues of imcomplete markets and imperfect information in the context of credit markets in rural northern nigeria in much recent theoretical literature the problems of moral hazard and adverse selection are assumed to be decisive for the organization of agrarian institutions in contrast it is found that in the four villages surveyed credit transactions take advantage of the free flow of information within rural communities information asymmetries between borrower and lender are unimportant and their institutional consequences the use of collateral and interlinked contracts are absent credit transactions play a direct role in pooling risk between households through the use of contracts in which the repayment owed by the borrower depends on the realization of random production shocks by both the borrower and the lender

informal microfinance institutions and development led tourism entrepreneurship this paper explores how informal microfinance institutions imfis support development led tourism entrepreneurship through providing microcredit and development opportunities to small tourism firms stfs as well as undertaking communitarian projects and outreach activities that promote the business activities of stfs drawing on resilience and social capital as central concepts the paper argues that the form of collective action found in imfis can be examined to understand their impact on development led tourism entrepreneurship using cameroon as a case study important policy challenges in destinations where regulatory constrains cause many stfs to become dependent on imfis as opposed to formal regulated financial institutions in development led tourism are highlighted

the determinants of credit access and its impacts on micro and small enterprises the case of garment producers in kenya abstract there are diverse sources of credit for micro and small manufacturing enterprises mses in developing countries ranging from relatives and friends rotating savings and credit associations roscas micro finance institutions and commercial banks using a unique set of data on mses in garment clusters in nairobi this study attempts to identify the determinants of access to different credit sources and their impacts on firm profitability and growth the results of the regression analysis demonstrate that factors determining access to credit are often different from those affecting enterprise performance indicating limited impacts of credit access on enterprise performance

financial fragility and mexico s 1994 peso crisis an event window analysis of market valuation effects persistent cycles of devaluation debt repudiation and financial crisis have been recurrent themes in latin america and elsewhere this study focuses on one such event namely the mexican peso devaluation debt and financial sector crisis of 1994 95 this paper utilizes an event study framework with daily stock market data to document financial market responses to the unfolding crisis in particular we find that the devaluation itself was viewed as relatively benign by market participants the results also show little evidence that investors anticipated the peso devaluation the declining reserve levels of mexico s central bank and the increasing sovereign default risk of mexico however the results suggest that the equity markets did respond positively to remedial actions taken by governmental authorities such as the clinton bailout plan

co integrating var models and economic policy this paper surveys some relevant contributions to the economic literature on co integrating vector autoregressive var models vector error correction mechanisms vecms emphasizing their usefulness for economic policy it further discusses some theoretical aspects that are necessary for a complete understanding of their potential the theoretical introduction of the co integrating var model is followed by an illustration of its applications to monetary policy fiscal policy and exchanges rates as well as in establishing the effects of structural bilateral shocks between countries the so called global var or gvar models special attention is paid to the vecm capacities of being used in conjunction with dynamic stochastic general equilibrium models and of jointly specifying the short and long run dynamics thus representing the steady state of economic systems by means of the co integration relations and the short run dynamics around it

the foreign exchange exposure of japanese multinational corporations we find that about 25 percent of our sample of 171 japanese multinationals stock returns experienced economically significant positive exposure effects for the period january 1979 to december 1993 the extent to which a firm is exposed to exchange rate fluctuations can be explained by the level of its export ratio and by variables that are proxies for its hedging needs highly leveraged firms or firms with low liquidity tend to have smaller exposures foreign exposure is found to increase with firm size we also find that keiretsu multinationals are more exposed to exchange rate risk than nonkeiretsu firms it is conventional wisdom that exchange rate movements affect both the cash flows of a firm s operations and the discount rate employed to value these cash flows measuring foreign exchange exposure is now a central issue of international financial management and this issue has spawned a considerable amount of research existing empirical evidence on foreign exchange exposure however seems perplexing studies have so far documented a weak link between contemporaneous exchange rate fluctuations and stock returns of u s multinational firms 2 gendreau 1994 finds it difficult and unconvincing that the weak results imply that exchange rate changes have no effect on exporters stock returns bartov arnd bodnar 1994 attribute the observed insignificant relationship between exchange rate changes and st ock returns to probable problems associated with the previous studies samiple selection procedure or to mispricing caused by investors errors in estimat

roscas as financial agreements to cope with self control problems abstract we consider a model in which people with limited self control can sign binding financial agreements among themselves thereby forming coalitions we show that these financial agreements may help them to alleviate their self control problems we then demonstrate that there exists a stable structure of coalitions in which people form rotating savings and credit associations roscas we therefore provide a behavioral rationale for one of the most prevalent and puzzling financial institutions in developing countries finally we derive and discuss some empirical predictions

roscas in urban ethiopia are the characteristics of the institutions more important than those of members abstract using household data from urban ethiopia we provide an empirical test of the economic theory of rotating savings and credit associations roscas and identify the impact of roscas and member characteristics on participation and volume of saving unlike other studies we account for the endogeneity of all rosca variables muslims individuals who live in richer households the self employed private sector employees and households with large numbers of women are more likely to join roscas a robust finding is that the savings are significantly affected by the characteristics of the members but not that of the informal saving institution some policy implications are discussed

nonmarket institutions for credit and risk sharing in low income countries the design credit and risk institutions in low income countries provides one of the most exciting testing grounds for theories of contracting with imperfect information and limited enforcement this paper reviews some of the recent literature with a special focus on nonmarket institutions that cope with risk and provide credit this literature attempts to bring together insights from economic theory especially information economics contract theory and mechanism design theory however it is also applied being motivated by the circumstance of the poor countries that their authors have visited and studied

financial access and exclusion in kenya and uganda abstract policy emphasis has recently shifted to finance for all given evidence that financial sector development contributes to growth but effects on poverty do not arise from pro poor provision we argue that given this policy goal analyses of barriers to access must be country specific and go beyond the emphasis on transactions costs to incorporate the effects of social institutions since these contribute to discrimination this paper uses data from financial access surveys carried out in 2006 in kenya and uganda to investigate the socio economic demographic and geographical factors influencing access to and exclusion from formal semi formal and informal financial services

wage growth and the inflation process a multivariate cointegration analysis past empirical analysis of the relationship between wages and prices within the expectations augmented phillips curve model have raised doubts about the effects of labor costs on inflation analysis of the same data used previously reveals the existence of a deterministic linear time component in the wage and price series which past research failed to take into account using the johansen 1988 1992 1994 multivariate cointegration technique the paper provides robust evidence on the consistency of the markup view of the inflation process with the data and concludes that monetary policy should profit from labor costs data in predicting future rates of inflation

adapting to the financial landscape evidence from small firms in nairobi abstract small enterprises face a financial landscape that limits their access to bank loans and trade credit they adapt by relying on a range of other mechanisms to relieve the financing constraint employing an institutional framework the paper explores the use of credit from suppliers customers and other sources a unique finding is that very small firms use purchase orders as a signaling device to obtain irregular access to trade credit the use of pre payments installments and overdrafts is also investigated the results indicate that small firms may be less credit constrained than is suggested by a narrow definition of credit evidence is drawn from a survey of 115 micro and small manufacturing enterprises in nairobi

ethnicity and credit in african manufacturing abstract this paper investigates whether market interaction can by itself perpetuate the lack of ethnic diversity that is observed in the business communities of many developing countries using case study data on manufacturing firms in kenya and zimbabwe we find no evidence that blacks or women are disadvantaged in the attribution of bank credit once we control for firm size and other observable characteristics in contrast an ethnic and gender bias is noticeable in the attribution of supplier credit although we cannot rule out the presence of discrimination the bulk of the evidence indicates that network effects play an important role in explaining this bias

currency devaluation and stock market response an empirical analysis abstract we study local stock market reaction to currency devaluation by a country s central bank devaluations appear to be anticipated by the local stock markets and there are significant negative abnormal returns even one year prior to the announcement of the devaluation a negative trend in stock returns persists for up to one quarter following the first announcement and then becomes positive thereafter suggesting a reversal we explore whether changes in macroeconomic variables prior to currency devaluations are related to abnormal stock returns we find that stock returns are significantly lower if the devaluation is larger and if the country is a developing nation furthermore stock markets decline more around devaluations if reserves are lower if the real exchange rate has depreciated over the prior years if the capital account has declined if the current account deficit has gone up or if the country credit rating has deteriorated

does family employment enhance mses performance integrating socioemotional wealth and family embeddedness perspectives abstract this paper analyzes the effect of family employment on performance in micro and small enterprises mses by combining two research perspectives that until now have been conducted separately the family embeddedness perspective of entrepreneurship aldrich and cliff 2003 and the socioemotional wealth sew approach to family business gomez mejia et al 2007 our integrated perspective allows us to highlight how the nature of the employment relationships in mses enhances the benefits derived from the socioemotional endowment associated with family labor and reduces the opportunity costs of employing relatives moreover we assert that this relationship is moderated by specific family characteristics that determine the firm s ability to preserve the sew while at the same time pursuing financial goals our results provide partial support to the enhancing role of family labour on mses performance employing family members increases sales but decreases profitability as measured by roa this effect also results in improved performance for women led firms and for firms that have received family funding but impairs mses performance when the business is the main source of the owner s household income

mighty oaks from little acorns can microenterprise serve as the seedbed of industrialization abstract how can microenterprises foster the development of an industrial sector featuring a dynamic medium or large enterprise sector we propose two possible mechanisms graduation of microenterprises and savings by microentrepreneurs we examine the barriers to both mechanisms and reexamine policies designed to aid the sector projects aimed at the enterprise level are not likely to remove barriers to firms graduating or saving changes in macro policy may have a positive effect reforms of the legal and regulatory environment may be very important and should be rethought with the mechanisms of the seedbed role specifically in mind

an evaluation of the forecast performance of alternative models of inflation the forecast performances of three groups of models of the inflation process are evalu ated in this paper ra tional expectations models with instantaneous market clearing monetarist models and expectations augmented phillips curves the dynamic simulations performed for the intervals between 1977 and 1984 are somewhat discouraging for all three theories the variation in forecasting performance within model groups often exc eeded the variation in performance across model groups nevertheless the philli ps curve formulation rarely performed worse than the other two models and in th e 1981 to 1984 period it performed substantially better than the alternative mod els of inflation copyright 1987 by mit press

stock returns following large one day declines evidence on short term reversals and longer term performance we examine stock returns following large one day price declines and find that the bid ask bounce and the degree of market liquidity explain short term price reversals further we do not find evidence consistent with the overreaction hypothesis we observe that securities with large one day price declines perform poorly over an extended time horizon while the concept of market overreaction has been noted for many years its formal description and examination is a relatively recent area of study debondt and thaler 1985 define the overreaction hypothesis as the overresponse to new information this hypothesis suggests that extreme movements in stock prices are followed by movements in the opposite direction to correct the initial overreaction and that the greater the magnitude of initial price change the more extreme the offsetting reaction one manner in which the overreaction hypothesis has been studied is the analysis of stock returns following large one day stock price declines brown harlow and tinic 1988 and atkins and dyl 1990 find significant reversals for stocks that experience one day price declines focusing on extreme price movements bremer and sweeney 1991 examine returns following one day price declines of 10 percent or more for fortune 500 firms that are in the center for research in security prices crsp data files they find significant positive three day abnormal returns over the period 1962 to 1986 and note that this three day recovery is inconsistent with stock prices fully and quickly reflecting relevant information they also suggest that market illiquidity may partially explain their findings the purpose of this study is to explain security return behavior following large one day declines our primary objective is to explore the role of the bid ask bounce market liquidity and overreaction in explaining price reversals in the three day period immediately following large one day declines large one day price declines are likely to be associated with substantial selling pressure enhancing the probability that a closing transaction is at a

the dynamics of micro and small enterprises in developing countries abstract the number of people engaged in micro and small enterprises increases as a result of new enterprises being started and through an expansion of existing activities as a partial offset to these increases employment declines when existing businesses cease operations this article draws on recent survey work to examine the magnitude and determinants of enterprise births closures and expansions it explores the ways in which these different sources of change are influenced by the state of the macroeconomy and examines policy and project implications

bootstrapping in small firms an empirical analysis of change over time abstract while bootstrapping is widely utilized as a strategic practice of small firms and has been regarded in the entrepreneurship literature as an important topic of study little has been done to link bootstrapping to organizational theory this paper presents hypotheses and an empirical study regarding bootstrapping and organizational development for small firms the results of the study indicate that different types of bootstrapping are utilized at different periods in the life of a small firm and that the methods utilized coincide to some extent with organizational theory predictions

real wages inflation and labour productivity in australia this paper presents an analysis of real wages inflation and labour productivity interrelationships using cointegration granger causality and most importantly structural change tests applications of tests to australian data over the 1965 2007 period corroborate the presence of a structural break in 1985 and show that a 1 percent increase in manufacturing sector real wages led to an increase in manufacturing sector productivity of between 0 5 and 0 8 percent comparable estimates for the effect of inflation on manufacturing sector productivity have limited statistical significance granger causality test results suggest that real wages and inflation both granger cause productivity in the long run

event studies in economics and finance the event study is an important research tool in economics and finance the goal of an event study is to measure the effects of an economic event on the value of firms event study methods exploit the fact that given rationality in the marketplace the effects of an event will be reflected immediately in security prices thus the impact can be measured by examining security prices surrounding the event in this paper event study methods are described including some of the potential complications an example is included to illustrate the approach

matching in informal financial institutions this paper analyzes an informal financial institution that brings heterogeneous agents together in groups we analyze decentralized matching into these groups and the equilibrium composition of participants that consequently arises we find that participants sort remarkably well across the competing groups and that they re sort immediately following an unexpected exogenous regulatory change these findings suggest that the competitive matching model might have applicability and bite in other settings where matching is an important equilibrium phenomenon jel o12 o17 g20 d40

the relation between common stock returns trading activity and market value this study examines the relation between common stock returns trading activity and market value our results indicate that although firm size and trading activity are highly correlated differences in trading activity are not the underlying reason for the firm size anomaly the finding of systematic differences in risk adjusted returns across stocks of firms of different size recent empirical research has revealed systematic differences in risk adjusted returns for common stocks of firms of different sizes as measured by the market value of outstanding common stock see banz 1 and reinganum 5 roll 7 in a recent paper has suggested that the firm size anomaly may result from errors in risk measurement in particular roll suggested that because small firms trade less frequently than large firms risk measures obtained from daily or weekly returns data may seriously underestimate the risk associated with holding a portfolio of small firms in response to roll s conjecture reinganum 6 examined the risk adjusted returns of portfolios formed on the basis of firm size using both the scholes williams 8 and the dimson 2 aggregated coefficient method of estimating portfolio betas and found that regardless of the beta estimation technique employed differences in estimated betas were insufficient to account for differences observed in the returns of size ranked portfolios if reinganum s 6 finding is correct that the firm size effect is not attributable to a misassessment of risk and if smaller firms trade less frequently than do larger firms then firm size may merely proxy for trading activity 1 thus the observed firm size effect may be explained in terms of a liquidity premium associated with inactively traded shares the purpose of this paper is to determine whether or not the firm size anomaly is explicable in terms of differences in the trading activity of common stocks a liquidity premium would provide a logically appealing explanation for the firm size effect tinic 11 demsetz 3 and others have argued that transactions costs vary inversely with trading activity as measured by average number of

history lessons the birth of impersonal exchange the community responsibility system and impartial justice this occasional feature will discuss episodes and events drawn from economichistory that have lessons for current topics in policy and research responses to thiscolumn and suggestions for future ones should be sent to kenneth sokoloff c ojournal of economic perspectives department of economics university of cali fornia los angeles 405 hilgard ave los angeles california 90095 1477

the linkage between prices wages and labor productivity a panel study of manufacturing industries 1 introductionpolicy makers and financial analysts cite wage pressures and productivity gains as leading factors in explaining inflation this cost push explanation of inflation however is questioned by mehra 1991 1993 2000 who shows that prices explain wages but that wages are not a causal factor in determining inflation studies by hu and trehan 1995 and gordon 1988 1998 report evidence indicating that wage growth has no predictive content for inflation rejecting the cost push view emery and chang 1996 and hess 1999 demonstrate that these findings are sensitive to the sample period examined ghali 1999 using granger causality tests finds that wage growth does help to predict inflation supporting the cost push view a related but also relatively unexplored relationship is that between real wages and productivity although this link is the building block of many macroeconomic models and is frequently cited in intermediate macroeconomic textbooks few empirical works have tested this relationship 1recently a large number of studies have begun testing long standing macroeconomic hypotheses using panel unit root and or panel cointegration tests however few studies have employed industry level panel data sets the current article contributes to filling this void it employs manufacturing industry data to evaluate the long run dynamics between wages prices and productivity rather than the traditional approach of examining macroeconomic aggregates more specifically using annual four digit industry level data from the manufacturing sector over the period 1958 1996 this article examines the relationship between prices and wage adjusted productivity as well as the linkage between productivity and real wages using panel unit root and cointegration estimation methods the increased power and precision of the panel methods are particularly valuable in this context because they allow the researcher to more accurately test for the existence of a one for one cointegrating equilibrium between labor market variables and industry output prices an additional objective of this article is to show the advantages and disadvantages of employing panel unit root and cointegration tests we demonstrate that the considerable heterogeneity of the data imply that the practitioner must be cautious in making inferences about the linkage between variables when using either pooling estimation methods or aggregate level data our methodology accommodates for heterogeneity by averaging coefficients as well as examines outlier effects through quartile analysis heterogeneity of the cointegrating vector and cross correlations are accommodated through analysis by industry of the extent of cointegration across the panel and monte carlo simulations that calculate correctly sized critical values our results suggest that a stable long run relationship exists between prices and wage adjusted productivity as well as between real wages and productivity for many but not all industries both relationships however have considerably varied estimates and in most cases differ from the one for one linkage found by mehra and others in aggregate level data furthermore granger causality tests support one way causation from prices to per unit labor costs ulc in both the short and the long run hence the industry level data reject the standard cost push explanation of wage pressures contributing to inflation supporting the aggregate level findings of mehra 1991 1993 2000 and others our findings suggest that prices may be driven more by demand side factors than supply side factors results further support bidirectional granger causality in the long run between real wages and labor productivity this implies that changes in real wages lead to productivity changes and is not inconsistent with the efficiency wage hypothesis at the same time productivity movements affect real wages which is consistent with efficient labor markets

differential information and security market equilibrium we propose a simple model of equilibrium asset pricing in which there are differences in the amounts of information available for developing inferences about the returns parame ters of alternative securities in contrast with earlier work we show that parameter uncer tainty or estimation risk can have an effect upon market equilibrium under reasonable conditions securities for which there is relatively little information are shown to have relatively higher systematic risk when that risk is properly measured ceteris paribus the initially very limited model is shown to be robust with respect to relaxation of a number of its principal assumptions we provide theoretical support for the empirical examination of at least three proxies for relative information period of listing number of security returns observations available and divergence of analyst opinion

exchange rate movements and the profitability of u s multinationals abstract this paper studies the effects of unexpected exchange rate movements on the stock returns of u s multinationals unlike most previous studies of exchange rate exposure we explicitly consider the time variability of exchange rate exposure by taking into account firms foreign sales and foreign production information in our tests empirical results based on a sample of eighty u s multinationals from seven 3 digit sic manufacturing industries show that the stock market correctly reveals the profitability effects of exchange rate news predicted by theory a depreciation shock to the u s dollar for example has significant positive effects on the abnormal returns on the stocks of the multinationals through foreign sales and significant negative effects through foreign production

interest rates in savings groups thrift or threat summary savings group sg models are praised for achieving financial inclusion for the poorest at a very low cost promoted by international ngos sg models are inspired by indigenous savings and credit associations roscas sg models however differ in that they prescribe lending the pooled savings to group members for an interest the interest rate aims to 1 boost capital accumulation 2 allocate scarce capital efficiently and 3 remunerate and incentivize savers this paper builds on a six month fieldwork conducted in dr congo consisting of direct observations of sg meetings and interviews with sg participants and practitioners we study the gaps between sg practitioners objectives and sg participants perceptions and practices related to the interest rate our research pays particular attention to the local context and local norms that interfere with sg practitioners objectives our analysis highlights three gaps first sg participants turn savings into credit for security purposes rather for rapid capital accumulation second credit allocation decisions are guided by fairness and security concerns rather than efficiency third sg participants often regard the accumulated interest as belonging to the group and to active borrowers rather than to passive savers our results invite development actors to pay greater attention to the potential risks of the sg approach for its participants despite the common appellation savings groups this microfinance innovation builds upon credit and strongly encourages its members to go into debt

impacts of community driven development programs on income and asset acquisition in africa the case of nigeria summary this study evaluates the impacts of a community driven development cdd project on household income and acquisition of productive assets in nigeria using recall data difference in differences and propensity score matching approaches the study finds that the project succeeded in targeting the poor and women farmers in its productive asset acquisition component participation in the project also increased the mean income of beneficiaries by about 40 60 but the impact of the project on income of the poorest beneficiaries was not statistically significant additionally sustainability of this achievement is uncertain since the project did not involve rural credit services the large cash transfer through its productive asset acquisition component is also unsustainable future studies should be undertaken using longer term panel data to capture the pattern and trend of the impact of this project

emerging market exchange rate exposure abstract we estimate the exposure of emerging market companies to fluctuations in their domestic exchange rates we use an instrumental variable approach that identifies the total exposure of a company to exchange rate movements yet abstracts from the influence of confounding macroeconomic shocks in the sub period of 1999 2002 we find that depreciations tend to have a negative impact on emerging market stock returns in the sub period of 2002 2006 this tendency has largely disappeared since we estimate the exchange rate exposure of firms from different countries with a common set of instruments we can make coherent cross country comparisons of their determinants we find that the impact of various measures of debt on exchange rate exposure which is negative and significant in the early sub period becomes insignificant and even reverses sign in the recent sub period

a credit score system for socially responsible lending ethical banking microfinance institutions or certain credit cooperatives among others grant socially responsible loans this paper presents a credit score system for them the model evaluates social and financial aspects of the borrower the financial aspects are evaluated under the conventional banking framework by analysing accounting statements and financial projections the social aspects try to quantify the loan impact on the achievement of millennium development goals such as employment education environment health or community impact the social credit score model should incorporate the lender s know how and should also be coherent with its mission this is done using multi criteria decision making mcdm the paper illustrates a real case a loan application by a social entrepreneur presented to a socially responsible lender the decision support system not only produces a score but also reveals strengths and weaknesses of the application

liability structure in small scale finance evidence from a natural experiment microfinance the provision of small individual and business loans has witnessed dramatic growth reaching over 150 million borrowers worldwide much of its success has been attributed to overcoming the challenges of information asymmetries in uncollateralized lending yet very little is known about the optimal contract structure of such loans there is substantial variation across lenders even within a particular setting this paper exploits a plausibly exogenous change in the liability structure offered by a microfinance program in india which shifted from individual to group liability lending the analysis finds compelling evidence that contract structure matters for the same borrower required monthly loan installments are 6 percent less likely to be missed under the group liability setting relative to individual liability in addition compulsory savings deposits are 19 percent less likely to be missed under group liability contracts

the role of small enterprises in the household and national economy in kenya a significant contribution or a last resort abstract based on a nationwide survey this article addresses the contribution of micro and small enterprises mses to employment national income and household income in kenya one third of all working persons are employed in mses and the sector contributes 13 to national income despite their large contribution as a whole returns to individual mses vary tremendously among those mses that represent the sole source of income for the household 72 make less than the absolute poverty line in urban areas and none of the mses in rural areas make above the absolute poverty line comparing hourly mse returns to average earnings in the private sector the majority make below the average earnings while a minority make significantly higher earnings

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

price inertia and policy ineffectiveness in the united states 1890 1980 this paper introduces a new approach to the empirical testing of the lucas sargent wallace lsw policy ineffectiveness proposition which compares the lsw hypothesis with an alternative that states that prices respond fully in the long run but only gradually in the short run to nominal aggregate demand disturbances the empirical equations estimated for a new set of quarterly data extending back to 1890 exhibit uniformly high responses of real output and low responses of price changes to anticipated changes in nominal gnp the paper compares and tests three alternative methods of introducing persistence effects into the lsw framework

wages and prices in the uk this paper investigates the relationship between wages and prices in the uk using a vecm formulation and generalized impulse response functions and persistence profiles because of significant feedbacks it finds that fluctuations in wage growth cannot be used directly to predict fluctuations in inflation

north s institutionalism and the prospect of combining theoretical approaches the distinction between new and old institutional economics may be unhelpful in depicting those theorists who defy clear categorisation one such writer is douglass north who is associated with the new institutionalism but who deviates from the neoclassical principles which supposedly form the foundations of this school the paper analyses his work to show how he combines both mainstream and alternative ideas in attempting to reconcile individual agency with social structure north suggests that institutions provide the constraints under which decisions are made but that individuals and organisations can alter those constraints while his work is an attempt to advance interdisciplinary research it fails to provide a fully integrated theoretical approach

trade credit in zimbabwean manufacturing abstract credit from suppliers is an important but often neglected source of finance for manufacturing firms zimbabwe is no exception unlike credit from financial institutions trade credit does not rely on formal collateral but on trust and reputation contract enforcement is flexible network effects and statistical discrimination affect the screening of trade credit applicants black entrepreneurs are disadvantaged by their lack of business contacts and by the difficulty of distinguishing themselves from the mass of financially insecure and short lived african owned businesses in zimbabwe a vicious circle is created between weak financial base unreliability as a debtor and inability to gain access to credit