Q2. What is the main challenge of India’s 21st century?
Although the proportion of persons below the poverty line has declined from around 36 per cent of the population in 1993-94 to 28 per cent in 2004-05, poverty reduction remains the country’s major challenge in the 21st century.
Q3. What is the hypothesis of the study?
The hypothesis of their study is: (1) access to microfinance institutions (MFIs) andproductive loan reduces poverty and (2) amount of productive loan has a poverty reducing effect.
Q4. What is the latent variable that underlies the estimation of equation (8)?
Underlying the estimation of equation (8), is a latent variable which is assumed to be linearly related to the vector of independent variables.
Q5. What is the effect of having a higher IBR indicator on a household?
Households with older household heads tend to have higher IBR indicators with some non-linear effects, that is, the IBR indicator first increases as the household head gets older and then decreases.
Q6. What is the merit of the treatment effects model?
The merit of the treatment effects model is that sample selection bias is explicitlyestimated by using the results of the probit model.
Q7. Why did MFIs become increasingly important in India in the 1990s?
In the 1990s, MFIs became increasingly important in India mainly due to their betteraccess to local knowledge and information at community level and their use of peer group monitoring.
Q8. Why do the authors first derive the estimates for total households?
Because of the fundamental differences of environment, industrial structures, household characteristics and activities between urban and rural areas, the authors first derive the estimations for total households and then for urban areas and rural areas separately.
Q9. What is the main argument for the expansion of the microfinance sector?
Despite the exceptional growth of the microfinance sector during the last three decades in serving around 40 million clients, most parts of the developing world would still remain characterised by huge demand for micro financial services.
Q10. What is the argument that microfinance institutions should seek profits?
According to Cull et al. (2009), the argument that microfinance institutions should seek profits has an appealing ‘win-win’ resonance, admitting little trade-off between social and commercial objectives.
Q11. What is the effect of the probit model on the availability of non-farm business?
The availability of non-farm business is highly significant in all cases as this increases the demand for loans for productive purposes.
Q12. What is the effect of access to MFIs on poverty?
For households in rural areas, a larger poverty reducing effect of MFIs is observed when access to MFIs is defined as taking loans from MFIs for productive purposes than in the case of simply having access to MFIs.
Q13. What was the stratified random sample of clients, non-clients and dropouts?
Within each sample area, a stratified random sample of clients, non-clients and dropouts was drawn using wealth ranking as a basis for stratification7
Q14. How can the authors compare the IBR indicators of households with and without access to MFIs?
Because the authors have only cross-sectional data, the authors can compare IBR indicators of households with access to MFIs and those without, as long as MFIs are randomly distributed across the sample.