the microfinance promise in the past decade microfinance programs have demonstrated that it is possible to lend to low income households while maintaining high repayment rates even without requiring collateral the programs promise a revolution in approaches to alleviating poverty and spreading financial services and millions of poor households are served globally a growing body of economic theory demonstrates how new contractual forms offer a key to microfinance success particularly the use of group lending contracts with joint liability for the most part however high repayment rates have not translated into profits and studies of impacts on poverty yield a mixed picture in describing emerging tensions the paper highlights the diversity of innovative mechanisms beyond group lending contracts the measurement of financial sustainability the estimation of economic and social impacts the costs and benefits of subsidization and the potential to reduce poverty through savings programs rather than just credit the promise of microfinance has pushed far ahead of the evidence and an agenda is put forward for addressing critical empirical gaps and sharpening the terms of policy discussion

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

the impact of microcredit programs on self employment profits do noncredit program aspects matter microcredit programs provide a two tiered approach to poverty alleviation credit for the purchase of capital inputs in order to promote self employment and noncredit services and incentives these noncredit aspects may be an important component of the success of microcredit programs however because they are costly to deliver and their contribution to the success of the programs is difficult to measure they may not be properly valued this paper uses primary data on household participants and nonparticipants in grameen bank and two similar microcredit programs to measure the total and noncredit effects of microcredit program participation on productivity the total effect is measured by estimating a profit equation and the noncredit effect by estimating the profit equation conditional on productive capital productive capital and program participation are treated as endogenous variables in the analysis i find large positive effects of participation and the noncredit aspects of participation on self em

safe and satisfied external effects of homeownership in rotterdam the article analyses the impact of homeownership on neighbourhood safety and neighbourhood satisfaction using a unique panel dataset for the city of rotterdam the results show that there are significant but economically small effects of homeownership on safety and satisfaction moreover the relation between ownership and satisfaction is significantly moderated by neighbourhood safety the paper examines whether the marginal impact of increases in homeownership on external effects diminish once ownership levels are higher according to the data this seems to be the case the results are robust to alternative specifications the findings provide insights for the evaluation of housing market policies that subsidise or stimulate homeownership

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 diffusion of production processes in the u s banking industry a finite mixture approach abstract this article applies finite mixture distributions to the estimation of cost functions for financial firms through time the mixture approach allows the estimation of multiple technologies when firms technology choices are unobservable technology switching diffusion and underlying technical change are simultaneously evaluated an application to large samples of u s banks for the years 1982 1986 illustrates the approach results suggest banks switch to lower cost production technologies when unburdened by strict branching regulations

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

low income homeownership american dream or delusion summary this paper is a critical analysis of recent us policy to promote low income homeownership it examines the ideology and assumptions buttressing this policy evidence on the effects of low income homeownership and the viability of homeownership as a strategy for low income families evidence suggests that the prospect for sustained growth in low income homeownership may be limited research does not provide uniform support for it as a tool for asset accumulation neighbourhood economic development or other social and political goals alleged effects of homeownership may be artefacts of self selection and the conflation of homeownership with unobserved characteristics coincident with buying homes what homeownership does and why are not well understood because of difficulties disentangling what homeownership means the elevation of low income homeownership to its current status has deflected political attention away from alternative policies for affordable housing

unsubsidized microfinance institutions this paper starts from the observation that 23 of the world s microfinance institutions mfis manage without subsidies we examine how unsubsidized institutions cope with their social mission overall the lack of subsidies worsens social performances however our results show that strategies to achieve financial self sufficiency differ substantially across regions african and asian mfis compensate for non subsidization by charging higher interest rates in eastern europe and central asia unsubsidized mfis find it more suitable to target less poor clients unsubsidized latin american mfis tend to reduce their share of female borrowers

the dynamics of race income and homeownership abstract this paper treats household decisions regarding homeownership as a dynamic process rather than a static phenomenon the analysis employs a duration model of the sequential housing choices made by families to examine the adjustment of their housing tenure over time this model of housing choice is estimated for the nine year period 1984 to 1992 utilizing the panel study of income dynamics psid particularly for lower income and minority families the analysis finds that these households achieve homeownership more slowly they are less likely to maintain this status and they are less able to move up to better units over time

credit elasticities in less developed economies implications for microfinance policymakers often prescribe that microfinance institutions increase interest rates to eliminate their reliance on subsidies this strategy makes sense if the poor are rate insensitive then microlenders increase profitability or achieve sustainability without reducing the poor s access to credit we test the assumption of price inelastic demand using randomized trials conducted by a consumer lender in south africa the demand curves are downward sloping and steeper for price increases relative to the lender s standard rates we also find that loan size is far more responsive to changes in loan maturity than to changes in interest rates which is consistent with binding liquidity constraints

financial performance and outreach a global analysis of leading microbanks microfinance contracts have proven able to secure high rates of loan repayment in the face of limited liability and information asymmetries but high repayment rates have not translated easily into profits for most microbanks profitability though is at the heart of the promise that microfinance can deliver poverty reduction while not relying on ongoing subsidy the authors examine why this promise remains unmet for most institutions using a data set with unusually high quality financial information on 124 institutions in 49 countries they explore the patterns of profitability loan repayment and cost reduction the authors find that institutional design and orientation matter substantially lenders that do not use group based methods to overcome incentive problems experience weaker portfolio quality and lower profit rates when interest rates are raised substantially for these individual based lenders one key to achieving profitability is investing more heavily in staff costs a finding consistent with the economics of information but contrary to the conventional wisdom that profitability is largely a function of minimizing cost

the false promise of homeownership homeowner societies in an era of declining access and rising inequality in the late 20th century homeownership became entrenched in a wider societal project that sought to transform the economy and increase social inclusion this project focused on mortgaged owner occ

homeownership in the 1980s and 1990s aggregate trends and racial gaps abstract housing policy under the clinton and bush administrations has sought to boost homeownership while also narrowing racial gaps in owner occupancy rates against that backdrop homeownership rose sharply in the 1990s but white minority gaps remain in excess of 25 percentage points we analyze these patterns using data from the 1983 to 2001 survey of consumer finances results indicate that household characteristics explain most of the increase in homeownership and roughly two thirds of the white minority homeownership gap credit barriers account for no more than 5 percentage points of the remaining gap this suggests that policy makers will need to look beyond innovations in mortgage finance if their goal is to further expand homeownership

who actually decides parental influence on the housing tenure choice of their children we focus on the role of within family socialisation and the relationship between socialisation and resource transfers in the intergenerational transmission of housing preferences the formation of

a little at a time the use of regularly scheduled repayments in microfinance programs abstract informal lenders appear to be thriving even in regions where microfinance institutions mfis such as the grameen bank have established lending programs we suggest that an explanation for this well documented observation lies in the ubiquitous use of regularly scheduled repayments by mfis borrowers are typically required to repay their loans in tightly structured installments beginning soon after loan disbursement this little remarked aspect of the repayment schedule is usually explained as inculcating fiscal discipline among borrowers we argue that an alternative rationale for this loan repayment structure lies in the difficulty of monitoring borrowers actions the potential for moral hazard leads mfis to use innovative mechanisms such as regularly scheduled repayments which indirectly coopt the better informed informal lenders conversely this installment repayment structure allows informal lenders to survive further we show that this linkage can not only expand the volume of informal lending but may also raise the interest rate in the informal sector

taking apart the american dream the influence of income and family composition on residential evaluations americans overwhelming desires for single family homeownership have been so well documented that they have been termed the american dream government and financial incentives for homeownership are believed to allow the fulfillment of uniformly accepted housing norms which drive people to buy their own homes this research takes apart that american dream by examining the preferences of different income and family life cycle groups for housing and neighborhood characteristics associated with the housing bundle based on a sample of syracuse metropolitan respondents this research applies the factorial survey method to assess the variations in housing preferences by socio economic status and family composition findings show that all groups of respondents were indifferent to housings tenure all respondents desired single family housing but the intensity of these preferences for single family homes over other types of housing varied among subgroups strong desires were expressed not to live among blacks

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

changes in the cost of intermediation the case of savings and loans the minimum cost output configuration for a firm may change as the result of a variety of factors including changes in market structure in this paper we test this structural change hypothesis with savings and loan data we find support for the hypothesis that separable constant returns to scale production functions characterize the average savings and loan in our sample in 1983 this is in contrast to the cost complementarities found in 1978 we argue that this result may be the result of regulatory changes that allowed savings and loans to alter their production mix to fully capture the benefits of joint production it seems reasonable to assume that the cost minimizing configuration of a multiproduct firm is potentially subject to nonstationarity during periods of structural change in input and or output markets the late 1970s and early 1980s represent such a period of turbulence for many markets in the financial services industry volatile interest rates combined with technological and regulatory changes may have caused firms in this industry to alter their output mixes in an effort to capture cost complementarities from joint production the purpose of this paper is to test this hypothesis of structural change in the savings and loan industry using both a translog and minflex laurent translog mlt specification of the production function we have chosen to investigate savings and loans s ls during the late 1970s and early 1980s for two reasons first s ls provide an ideal vehicle for testing our hypothesis because they were restricted almost exclusively to mortgages and securities as outputs before the passage of the depository institutions deregulation and monetary control act of 1980 and the garn st germain act of 1982 moreover there were also market changes with respect to both the pricing and mix of inputs i e deposits our second rationale involves the fact that there is a large and growing body of literature in the area of what is now called the

economies of scope in the health sector the case of portuguese hospitals abstract background economies of scope are defined as the potential cost savings arising from the joint production of two or more outputs rather than their separate production given the importance of the health sector for the community measuring the existence of potential economies of scope contributes to the improvement of this sectors sustainability objective s to identify economies of scope in portuguese hospitals using frontier based methods methods this paper develops 1 a generalized algorithm to obtain locally convex frontiers using the directional order ldo frontier method and 2 a generalized economies of scope based ratio that allows the introduction of any inefficiency source data this paper uses the 2002 2009 dataset for portuguese hospitals concerning the provision of obstetrics gynaecology and paediatrics ogp and psychiatric psy services results considerable economies and diseconomies of scope were found in the portuguese public hospitals a considerable dependence on the production line and on the merger status of the hospital was observed diseconomies of scope were more likely for larger hospitals i e those with more than 6000 inpatient discharges and or 7500 medical appointments per year conclusions even merged hospitals can exploit economies of scope however when they become outsized entities such efforts become more difficult

home ownership as a social norm and positional good subjective wellbeing evidence from panel data much attention has been devoted to examining the absolute benefits of home ownership e g security and autonomy this paper by contrast is concerned with conceptualising and testing the relative benefits of home ownership those benefits that depend on an individual s status in society home ownership has previously been analysed as a social norm implying that the relative benefits costs associated with being an owner renter are positively related to relevant others home ownership values the theoretical contribution of this paper is to additionally conceptualise home ownership as a positional good implying that the status of both home owners and renters is negatively related to relevant others home ownership consumption the empirical contribution of this paper is to quantitatively test for these relative benefits in terms of subjective wellbeing we run fixed effects regressions on three waves of the british household panel study we find that 1 a strengthening of relevant others home ownership values is associated with increases decreases in the subjective wellbeing of home owners renters and 2 an increase in relevant others home ownership consumption decreases the life satisfaction of owners but has no effect for renters overall our findings suggest that 1 the relative benefits of home ownership are both statistically significant and of a meaningful magnitude and 2 home ownership is likely to be both a social norm and a positional good without explicitly recognising these relative benefits policymakers risk overestimating the contribution of home ownership to societal wellbeing

the socioeconomic impact of shared appreciation mortgages on borrowers empirical evidence from south australia shared appreciation mortgages sams realign traditional incentives in the lender borrower relationship by substituting future capital gains for interest income this makes them a potentially innovative solution to affordability and other homeownership crises taxation and regulatory barriers have impeded sam development limiting empirical studies of their impact on households this has not been the case in south australia where state government implementation of sams has made available a unique and detailed dataset of low income sam financed households examining this population it is found that sam borrowers benefit from increased budgetary expenditure on discretionary items following take up while simultaneously saving on some non discretionary items relative to a control sample furthermore sam homeownership also seems associated with increased borrower levels of neighbourhood satisfaction and community involvement overall these results indicate that sam financed homeownership leads to changes in borrower behaviour and deserves further consideration by the housing industry and research community

the social and private micro level consequences of homeownership abstract this paper reviews the literature that describes the micro level economic and social consequences of homeownership we adopt an interdisciplinary approach and include studies from economics sociology geography political science psychology and other disciplines our focus is on the set of consequences of homeownership in developed countries our list of potential outcomes of homeownership includes the impact on household wealth and portfolio choice mobility labor force participation urban structure and segregation home maintenance political and social activities health demographics self esteem and child outcomes there is substantial evidence that homeownership has important effects on some household behaviors and outcomes however we find that much of the past 30 year s literature on consequences of homeowning is deficient from a theoretical or econometric perspective we suggest solutions and identify research gaps present in the literature

evidence on price stabilization and underpricing in early ipo returns using data on 560 firm commitment initial public offerings of common stock for the 1982 1983 period we find that the cross sectional distribution of one day returns is modeled better as a mixture of two distributions with the parameter estimates of one distribution being consistent with underpricing and the other with price stabilization further the evidence that early ipo returns are drawn from a mixture distribution persists for at least four weeks the implications of these results for the analysis of ipo returns are illustrated by examining the influence of a measure of ex ante price uncertainty on ipo pricing

frontier estimation and firm specific inefficiency measures in the presence of heteroscedasticity the purpose of this article is to illustrate a straightforward and useful method for addressing the problem of heteroscedasticity in the estimation of frontiers a heteroscedastic cost frontier model is developed and estimated using bank cost data similar to that used by ferrier and lovell our results show dramatic changes in the estimated cost frontier and in the inefficiency measures when accounting for heteroscedasticity in the estimation process we find that the rankings of firms by their inefficiency measures is affected markedly by the correction for heteroscedasticity but not by alternative distributional assumptions about the one sided error term

finite mixture estimation of multiproduct cost functions this paper presents a technique of cost function estimation based on the theory of finite mixture distributions which allows for the simultaneous existence of multiple technologies of production when the researcher does not know which observations correspond to which technologies the finite mixture technique provides estimates of the proportions of firms using the various technologies facilitates comparisons between technologies and preserves the traditional interpretations of cost estimation after describing the mixture procedure the technique is illustrated on a large sample of savings and loan associations and it is concluded that this industry exhibits multiple technologies of production copyright 1991 by mit press

peer monitoring and credit markets a major problem for institutional lenders is ensuring that borrowers exercise prudence in the use of the funds so that the likelihood of repayment is enhanced one partial solution is peer monitoring having neighbors who are in a good position to monitor the borrower be required to pay a penalty if the borrower goes bankrupt peer monitoring is largely responsible for the successful financial performance of the grameen bank of bangladesh and of similar group lending programs elsewhere but peer monitoring has a cost it transfers risk from the bank which is in a better position to bear risk to the cosigner in a simple model of peer monitoring in a competitive credit market this article demonstrates that the transfer of risk leads to an improvement in borrowers welfare

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

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