does microfinance reduce rural poverty evidence based on household panel data from northern ethiopia evidence on the long term impacts of microfinance credit is scarce we use a unique four round panel dataset on farm households in northern ethiopia that had access to microfinance observed on two key poverty indicators household consumption and housing improvements fixed effects and random trend models are used to reduce potential selection biases due to time invariant unobserved heterogeneity and individual trends therein results show that borrowing indeed causally increased consumption and housing improvements a flexible specification that takes into account repeated borrowings also suggests that borrowing has cumulative long term effects on these outcomes implying that short term impact estimates may underestimate credit effects

revealed objective functions of microfinance institutions evidence from bangladesh abstract this paper discerns between two alternative objective functions for not for profit microfinance institutions mfis profit maximization and poverty targeting i use the strategic branch location choices of the two largest mfis in a mature concentrated market to reveal their objectives i consider location decisions to be the pure strategy nash equilibrium outcome of a one shot game where the mfis simultaneously choose markets in which to locate as well as how many branches to open in each applying the duality principle i nest fully a pure profit maximization objective within a poverty targeting motive i test the model using comprehensive data from bangladesh in 2003 structurally estimating profit and impact functions my msm estimates suggest that pure profit maximization cannot explain the branch placement pattern for grameen bank or brac they both deviate towards poverty alleviation targeting one higher standard deviation of poverty headcount costs grameen 35 2 of its potential profits and brac 51 4

why are informal loans still a big deal evidence from north east thailand abstractthis article examines the use and benefit of informal loans for different income groups of rural households in north east thailand using a difference in differences estimation approach which is later complemented by propensity score matching the article shows that different household groups profit from informal loans in different ways poor households increase their asset endowment and in particular farming assets whereas rich households food consumption rises especially if households borrow due to a shock by showing that informal loans serve different households for different purposes this article provides an explanation why they still play an important role

does microcredit increase household welfare in the absence of microinsurance summary this study answers the question does a combination of microcredit and microinsurance improve the wellbeing of low income households we examine this challenge through heckman sample selection instrumental variable and treatment effect models the findings indicate that households using microcredit in combination with microinsurance derive significant gains in terms of welfare improvement microcredit may be good but its benefit to the poor is enhanced and sustained if the poverty trapping risks are covered with microinsurance to this extent combining microcredit with microinsurance will empower the poor to make a sustainable exit from poverty

does microfinance reduce poverty in bangladesh new evidence from household panel data abstract the study examines whether loans from microfinance institutions mfi reduce poverty in bangladesh drawing upon the nationally representative household panel with four rounds from 1997 to 2004 the effects of general microfinance loans and loans for productive purposes on income food consumption and women s body mass index are estimated overall effects of mfi loans on income and food consumption were positive and the purpose of the loan is important in predicting which household welfare indicator is improved alternative estimation methods confirm a positive impact of mfi loans on food consumption growth which supports the poverty reducing effects of microfinance in bangladesh

the impact of group lending in northeast thailand abstract much of the literature on group lending focuses on its high repayment rates rather than its goal of promoting borrower welfare most studies that attempt to measure the impact of group lending neglect the issues of self selection and endogenous program placement thus leading to biased estimates of impact one reason for this neglect is the lack of data that would allow for identification of impact this paper surmounts these problems by using data from a quasi experiment conducted in northeast thailand in 1995 1996 program participants were identified in six control villages 1 year prior to receiving loans surveys were then conducted of these control members treatment members in eight older program villages and nonmembers in both types of village this survey design allows for straightforward estimation of impact the results indicate that program loans are having little impact although naive estimates of impact that fail to account for self selection and endogenous program placement significantly overestimate impact

the role of subsidies in microfinance evidence from the grameen bank the grameen bank of bangladesh has been in the vanguard of the microfinance movement showing the potential to alleviate poverty by providing credit to poor house holds part of this success has been built on subsidies in 1996 for example total subsidies evaluated at the economic opportunity cost of capital amounted to about us 26 30 million the evidence helps to explain why institutions like grameen have not just sprung up on their own as private commercial ventures and it underscores the value of openly addressing the costs and benefits of subsidization the paper also describes recent difficulties in maintaining high repayment rates q 1999 elsevier science b v all rights reserved

the empirics of microfinance what do we know microfinance has received a lot of attention recently both from policy makers as well as in academic circles two of the main topics that have been hotly debated are explaining joint liability group lending and its implications for reducing information asymmetries and the trade off between the financial sustainability and outreach of microfinance programmes this feature contains three novel empirical contributions providing new insights with respect to why and how joint liability group lending works it also contains the first large scale systematic analysis of the trade off between financial performance and outreach of microfinance institutions

microfinance and poverty evidence using panel data from bangladesh micro finance supports mainly informal activities that often have low market demand it may be thus hypothesized that the aggregate poverty impact of micro finance in an economy with low economic growth is modest or nonexistent the observed borrower level poverty impact is then a result of income redistribution or short run income generation the author addresses these questions using household level panel data from bangladesh the findings confirm that micro finance benefits the poorest and has sustained impact in reducing poverty among program participants it also has positive spillover impact reducing poverty at the village level but the effect is more pronounced in reducing extreme rather than moderate poverty

the impact of microcredit on the poor in bangladesh revisiting the evidence abstractwe replicate and reanalyse the most influential study of microcredit impacts m m pitt s r khandker s the impact of group based credit on poor households in bangladesh does the gender of participants matter published in the journal of political economy 106 1998 that study was celebrated for showing that microcredit reduces poverty a much hoped for possibility though one not confirmed by recent randomised controlled trials we show that the original results on poverty reduction disappear after dropping outliers or when using a robust linear estimator using a new program for estimation of mixed process maximum likelihood models we show how assumptions critical for the original analysis such as error normality are contradicted by the data we conclude that questions about impact cannot be answered in these data

microfinance and poverty a macro perspective we test the hypothesis that microfinance reduces poverty at the macro level using cross country and panel data which are constructed by the microfinance information exchange data on microfinance institutions mfis and the world bank data taking account of the endogeneity associated with mfis loans we show that a country with higher mfis gross loan portfolio per capita tends to have lower levels of poverty indices contrary to recent micro evidence our results suggest that microfinance significantly reduces poverty at macro level and thus reinforce the case for channeling funds from development finance institutions and governments of developing countries into mfis

does self help group participation lead to asset creation summary we evaluate the effect of self help group participation on a long term impact parameter namely asset creation indian self help groups shgs are unique in that they are mainly ngo formed microfinance groups but later funded by commercial banks the results reveal that longer membership in shgs positively impacts asset creation robust to various asset specifications with longer participation in shgs members move away from pure agriculture as an income source toward other sources such as livestock income training by ngos positively impacts asset creation but the type of shg linkage per se has no effect

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

the importance of sample attrition in life cycle labor supply estimation we examine the importance of possible nonrandom attrition to an econometric model of life cycle labor supply using both a wald test comparing attriters to nonattriters and variable addition tests based on formal models of attrition estimates using the panel study of income dynamics show that nonrandom attrition is of little concern when estimating prime age male labor supply because the effect of attrition is absorbed into fixed effects in labor supply the wage measure and instrument set have much larger effects on the estimated labor supply function of prime age men than how one adjusts for panel attrition

impact of microcredit on borrowers expenditures a fuzzy regression discontinuity design approach abstractthis article uses the data from 69 villages in bangladesh to estimate the effect of participation in microcredit programmes on household expenditures a regression discontinuity design rdd is used to identify the credit effect our results show heterogeneous treatment effect on different types of expenditures we show that access to credit reduces per capita expenditure on durable goods such as kitchen equipment furniture repair and maintenance of house and increases the expenditure on per school going child we also show insignificant impact of access to credit on non durable goods and health care recreation and gifts interestingly our results indicate a positive impact of microcredit on village level expenditures

microenterprise credit programs deja vu abstract microenterprises in low income countries are the target of an increasing number of credit programs these efforts resemble earlier problematic attempts to assist operators of small farms with credit similarities discussed include target group definition assumptions policies and project justifications authors go on to list a dozen lessons from the experience with small farmer credit that might apply to microenterprise credit efforts authors then conclude that debt is not an effective tool for helping most poor people to enchance their economic conditions be they operators of small farms or microenterprises

is microcredit a blessing for the poor a meta analysis examining development outcomes and contextual considerations abstract increasing efforts aim at economic development and the reduction of poverty in developing countries through microcredit enabled entrepreneurship following the award of the nobel peace prize to prof yunus microcredit lending has risen to prominence and the volume of microcredit loans has increased substantially however theory on the outcomes of this financing form is controversial furthermore the academic community lacks conclusive empirical evidence about the impact of such programs primary empirical studies report fragmented and to a large extent contradictory results in this meta analysis we empirically synthesize a total of 545 quantitative empirical findings from 90 studies conducted to date our findings reveal a positive impact of microcredit on key development outcomes at the level of the client entrepreneurs additionally we scrutinize how the development context influences the effectiveness of microcredit and find that microcredit generally has a greater impact in more challenging contexts with our findings we contribute to research on the nexus of entrepreneurship and economic development and offer recommendations for practitioners and academics working on this promising frontier

child labor and schooling responses to access to microcredit in rural bangladesh microcredit has been shown to be effective in reducing poverty in many developing countries however less is known about its effect on human capital formation in this paper we develop a model examining the relation between microcredit and child labour we then empirically examine the impact of access to microcredit on children s education and child labour using a new and large data set from rural bangladesh we address the selection bias using the instrumental variable method where the instrument relies on an exogenous variation in treatment intensity among households in different villages the results show that household participation in a microcredit program may increase child labour and reduce school enrolment the adverse effects are more pronounced for girls than boys younger children are more adversely affected than their older siblings and the children of poorer and less educated households are affected most adversely our findings remain robust to different specifications and methods and when corrected for various sources of selection bias

microfinance and household poverty reduction new evidence from india the objective of the present study is to examine whether household access to microfinance reduces poverty using national household data from india treatment effects model is employed to estimate the poverty reducing effects of micro finance institutions mfis loans for productive purposes such as investment in agriculture or non farm businesses on household poverty levels these models take into account the endogenous binary treatment effects and sample selection bias associated with access to mfis despite some limitations such as those arising from potential unobservable important determinants of access to mfis significant positive effect of mfi productive loans on multidimensional welfare indicator has been confirmed the significance of treatment effects coefficients has been verified by both tobit and propensity score matching psm models in addition we found that loans for productive purposes were more important for poverty reduction in rural than in urban areas however in urban areas simple access to mfis has larger average poverty reducing effects than the access to loans from mfis for productive purposes this leads to exploring service delivery opportunities that provide an additional avenue to monitor the usage of loans to enhance the outreach

evaluating the econometric evaluations of training programs with experimental data this paper takes the results of an employment and training program thatwas run as a field experiment in which the participants were randomlyassigned into a treatment or a control group and compares these results to the estimates that might have been produced by an econometrician who evaluated the program using the same econometric procedures that have been used in the program evaluation literature this comparison shows that many of these econometric procedures fail toreplicate the experimentally determined results and suggests that researchers should be aware of the potential for specification errorsin other nonexperimental evaluations copyright 1986 by american economic association

threshold effects of financial status on the cost frontiers of financial institutions in nondynamic panels this article applies hansen s 1999 2000 threshold regression model to estimate translog cost frontiers in the hope of shedding light on the banking industry s production processes and the extent of its technical efficiency te the threshold technique allows for the existence of multiple technologies of production distinguished by an exogenous threshold variable strong evidence of multiple technologies is found in the industry irrespective of which financial indicator as constructed by factor analysis defines the threshold variable cost savings and scale economies among the various underlying technologies are compared herein we also highlight the differences between the threshold results and the conventional cost frontier

remittances and financial inclusion evidence from el salvador this paper investigates the impact of remittances on financial inclusion this is an important issue given recent studies showing that financial inclusion can have significant beneficial effects on households using household level survey data for el salvador the authors examine the impact of remittances on households use of savings and credit instruments from formal financial institutions they find that although remittances have a positive impact on financial inclusion by promoting the use of deposit accounts they do not have a significant and robust effect on the demand for and use of credit from formal institutions if anything by relaxing credit constraints remittances might reduce the need for external financing from financial institutions while at the same time increasing the demand for savings instruments

the mystery of the vanishing benefits an introduction to impact evaluation this article provides an introduction to the concepts and methods of impact evaluation the author provides an intuitive explanation in the context of a concrete application the article takes the form of a short story about a fictional character s on the job training in evaluation ms speedy analyst is an economist in the ministry of finance in the fictional country of labas in the process of figuring out how to evaluate a human resource program targeted to the poor ms analyst learns the strengths and weaknesses of the main methods of ex post impact evaluation

credit for what informal credit as a coping strategy of market women in northern ghana abstract this paper explores the use of informal credit as a strategy for managing risks by market women in northern ghana a broad concept of the costs of risk management strategies is introduced and encompasses both a time and monetary dimension based on qualitative data the analysis reveals that market women invest a considerable amount of time in maintaining complex networks of informal credit providers to ensure their access to credit once a shock occurs informal credit involves high transaction costs and prevents market women from growing out of poverty in the long term

microfinance and child mortality microfinance institutions mfis offer targeted opportunities for the poor to generate additional income with a range of financial services including credit insurance savings accounts and money t

outreach and performance of microfinance institutions the importance of portfolio yield in this paper we examine the interaction between social outreach and financial return in microfinance running multivariate regression models and using 1 805 observations of microfinance instituti

medium and long term participation in microcredit an evaluation using a new panel dataset from bangladesh the objective of this paper is to estimate the impacts of medium and long term participation in microcredit programs it utilises a new and large panel dataset collected from treatment and control households from 1997 to 2005 the data enables us to identify continuing participants in the program as well as newcomers and leavers we employ different estimation strategies including triple difference and propensity score matching methods to control for selection bias the impact estimates indicate that the benefits from microcredit vary more than proportionately with the duration of participation in a program larger benefits are realized from longer term participation and that the benefits continue to accrue beyond departure from the program the findings indicate the need to observe longer periods of participation to provide a reliable basis for assessing the effectiveness of microcredit lending

coping with flood role of institutions in bangladesh the article examines the coping strategies that rural households adopted during the 1998 flood in bangladesh and assesses its impact on household welfare including coping and vulnerability both vulnerability and poverty have in general declined in bangladesh yet 60 of rural households adopted a coping of one type or another and about half of rural households were both vulnerable as well as found to adopt any coping mechanism during the 1998 flood household level panel data analysis confirms that the flood reduced both consumption and asset and forced many households to adopt some coping mechanisms to mitigate the adverse effects of flood consequently natural disaster such as flooding increases households vulnerability to poverty however post flood bumper crop production and operation of targeted programs such as microfinance helped compensate the losses of flood

assessing the welfare effects of microfinance in vietnam empirical results from a quasi experimental survey this article analyses the effects of ngo microfinance programmes on household welfare in vietnam data on 470 households across 25 villages were collected using a quasi experimental survey approach to overcome any self selection bias the sample was designed so that member households of microfinance programmes were compared with non member households with similar characteristics the analysis shows no significant effects of participation in ngo microfinance on household welfare proxied by income and consumption per adult equivalent

effects of microcredit and other loans on female empowerment in bangladesh the borrower s gender influences intra household resource allocation this article examines microcredit s effectiveness in empowering women borrowers in rural bangladesh it does so by examining how gender specific borrowing activities influence household expenditures which are either specifically of interest to men or women and by examining the effects of all loans rather than only those provided by microcredit organizations the article uses a quasi experimental design to identify the effects of borrowing by men and women by using an original combination of panel data and instrumental variables on subsamples of the surveyed population it finds that the borrower s gender affects how households allocate their resources to different expenditure items and assets that are valued differently by men and women in all the findings suggest that providing greater credit access to women may improve their household bargaining positions

does microfinance reduce income inequality this study addresses the question whether participation of the poor in microfinance contributes to reducing a country s level of income inequality using data from 70 developing countries we show that higher levels of microfinance participation are indeed associated with a reduction of the income gap between rich and poor people we also show however that the effects of microfinance on reducing income inequality are relatively small the results of this study add to the discussion on the impact of microfinance on poverty by showing that although access to microfinance does seem to improve the relative income position of the poor this improvement is modest which is probably because the use of microfinance is generally small as compared to the size of the economy of the countries in our sample microfinance should therefore not be seen as a panacea for bringing down income inequality in a significant way

subsidies buybacks and sustainable fisheries abstract most fisheries subsidies which on a worldwide scale are immense are probably detrimental to resource conservation however payments used to buy out excess fishing capacity are often represented as useful subsidies on the grounds that overcapacity encourages overfishing and causes economic waste some commentators on the other hand assert that most buyback subsidies are ineffective because additional capacity tends to seep back into the fishery over time in this paper we take the latter argument further and demonstrate that buyback subsidies if they come to be anticipated by fishermen will generally have a negative effect on economic performance and resource conservation consequently buyback subsidies are perhaps over rated as a management tool

the impact of group based credit programs on poor households in bangladesh does the gender of participants matter this paper estimates the impact of participation by gender in the grameen bank and two other group based micro credit programs in bangladesh on labor supply schooling household expenditure and assets the empirical method uses a quasi experimental survey design to correct for the bias from unobserved individual and village level heterogeneity we find that program credit has a larger effect on the behavior of poor households in bangladesh when women are the program participants for example annual household consumption expenditure increases 18 taka for every 100 additional taka borrowed by women from these credit programs compared with 11 taka for men

do microfinance institutions benefit from integrating financial and nonfinancial services this article examines the impact of microfinance plus i e coordinated combination of financial and nonfinancial services on the performance of microfinance institutions mfis using a global data set of mfis in 77 countries we find that the provision of nonfinancial services does not harm nor improve mfis financial sustainability and efficiency the results however suggest that the provision of social services is associated with improved loan quality and greater depth of outreach

geographic poverty traps a micro model of consumption growth in rural china how important are neighbourhood endowments of physical and human capital in explaining diverging fortunes over time for otherwise identical households in a developing rural economy to answer this question we develop an estimable micro model of consumption growth allowing for constraints on factor mobility and externalities whereby geographic capital can influence the productivity of a household s own capital our statistical test has considerable power in detecting geographic effects given that we control for latent heterogeneity in measured consumption growth rates at the micro level we find robust evidence of geographic poverty traps in farm household panel data from post reform rural china our results strengthen the equity and efficiency case for public investment in lagging poor areas in this setting copyright 2002 john wiley sons ltd

measuring microfinance assessing the conflict between practitioners and researchers with evidence from nepal summary what accounts for the discrepancy between microfinance impact claims of development practitioners and the far smaller impacts found in experimental studies we demonstrate in a simple theoretical framework why before and after observations of practitioners overstate microfinance impacts and why estimations in some recent randomized trials understate the average treatment effect on the treated att our empirical study uses a unique data set from eastern nepal to study the impact of microfinance in villages where microfinance did not previously exist we find that approximately three fourths of the apparent impact of microfinance observed by practitioners is an illusion driven by correlated unobservable factors

microlending in emerging economies building a new line of inquiry from the ground up the world s poor may be the last great frontier in international business international microlenders are increasingly tapping into this emerging opportunity by extending small business loans to millions of borrowers however to date there is very limited understanding of this domain from an international business perspective using qualitative case studies developed in guatemala and the dominican republic we probe the causes and consequences of high performance and business failure for microloan recipients the analysis of these cases led to the development of six testable propositions focused on the behavior of borrowers whose loans populate the portfolios of international microlenders our research aims to lay a foundation in international business for future research on microlending

economic impact of a private sector micro financing scheme in south dakota while poverty rates on native american indian reservations are triple the us average small business incubation programs available elsewhere in the us scarcely exist on the native american indian reservations nairs our unique study tests the effects of the lakota fund lf a private sector small business development initiative on the pine ridge reservation in south dakota on the economic development of the nairs our objective is to determine whether the sba like programs loans training and consulting can improve economic conditions the 1980 2006 annual county level shannon co is treatment and todd co is control data are a natural experiment results indicate that the lf inception and duration significantly raised real per capita income rpci suggesting not only the success of the lf but support for the broader notion that privately funded small business initiatives can be used to support economic development of isolated impoverished groups within the us economy