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The microfinance promise
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In this article, the authors highlight 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.Abstract:
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.read more
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References
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Equilibrium Growth in a Small Economy Facing an Imperfect World Capital Market
TL;DR: In this paper, a growth model of a developing economy facing an upward-sloping curve of debt is analyzed, and the tax structure that enables the decentalized economy to attain the first-best equilibrium is characterized.
Book
Making the Poor Creditworthy: A Case Study of the Integrated Rural Development Program in India
TL;DR: In this paper, the authors examined the impact of the Integrated Rural Development Program (IRDP) and the long-term viability of credit-led approaches to poverty alleviation, and argued that future access to credit is essential not only to finance new investment, but also to provide working capital to offset declining yields that occur on most existing IRDP assets.
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Flow of funds: implications for research on financial sector development and the real economy
TL;DR: In this paper, the authors provide a selective survey of the leading theoretical and empirical issues surrounding the flow of funds: its meaning and origin, problems of construction, and more particularly the key issues involved in financial modelling.
Book
Outreach and Sustainability of Six Rural Finance Institutions in Sub-Saharan Africa
TL;DR: In this paper, the performance of six rural finance institutions (RFI's) in sub-Saharan Africa is reviewed using the World Bank documents and audited financial reports of the financial institutions.