Showing papers on "Microfinance published in 2022"

Financial inclusion through digitalisation: Economic viability for the bottom of the pyramid (BOP) segment

Abstract: The bottom of the pyramid (BOP) in every developing and frontier economy represents a largely untapped segment of the market that is excluded from formal financial markets because it cannot be served using the traditional financial market channels. We use a mixed-method approach to examine the challenges and intricacies of financial inclusion for the BOP segment in developing and frontier economies. To build a foundation for this debate, we conduct a review of the financial services and intermediaries serving the BOP, using case studies, experts’ insights, and quantitative analysis. Perspectives drawn from case studies of microfinancing firms and experts’ insights are used to explain the collaborations between businesses and formal institutions that can create a viable economic channel useful for serving the BOP segment. Further quantitative analysis demonstrates that a higher degree of financial inclusion for the BOP segment is likely to be achieved through the digitalisation of formal financial intermediaries, like banks.

Designing micro-fintech models for Islamic micro financial institutions in Indonesia

Abstract: Purpose This study aims to design appropriate micro-fintech models for Islamic microfinance institutions (IMFIs), especially Baitul Maal wat Tamwil (BMT) in Indonesia, thus enabling BMT to combine Islamic social and commercial microfinance optimally. Design/methodology/approach This study uses the analytic network process and Delphi methods, with three groups of experts as the respondents, namely, academician-regulators, BMT practitioners and Fintech practitioners. Findings The first results show that the micro-fintech tools needed by IMFI/BMT are digital banking, payment, peer-to-peer (P2P) financing, P2P social and e-commerce. These could be developed by a BMT alone or with an APEX or Association, which could also collaborate with an existing fintech company that specialises in micro-fintech, applying the offline to online approach. This means that commercial funding, as well as social fundraising of zakat and waqf, would be conducted online, whereas commercial financing for micro and small enterprise customers and the disbursement of zakat and waqf would be conducted offline. The second results show that the limited open ecosystem and hybrid ecosystem are the most appropriate micro-fintech ecosystems for IMFIs/BMT, with various alternative models. In addition, the private closed ecosystem preferred by BMT would be feasible if all criteria show improvement in the future. Research limitations/implications This study is qualitative in nature. The methods used have limitations, meaning the models could be improved by incorporating other methods. Moreover, the case and respondents are all Indonesian, which means that the results may only be applicable to BMTs in Indonesia. Practical implications A BMT and/or BMT association could immediately apply micro-fintech with a limited open ecosystem, while in the future, they could apply micro-fintech with a private closed ecosystem. Social implications The micro-fintech model could be used to optimise the collections of zakat, infaq and waqf, meaning BMT could provide more social programmes for those in need. Originality/value The growth of fintech in Islamic microfinance has occurred only recently, while only a limited number of studies have been conducted; therefore, no study exists on the development of a micro-fintech model appropriate for IMFIs, especially BMT.

Does microfinance foster the development of its clients? A bibliometric analysis and systematic literature review

Abstract: Abstract This paper conducts a scientometric analysis and systematic literature review to identify the trends in microfinance outcomes from the perspective of their recipients, specifically more vulnerable people, while also focusing on the demand side. Applying the keywords “co-occurrence networks” and “citation networks,” we examined 524 studies indexed on the ISI Web of Science database between 2012 and March 2021. The subsequent content analysis of bibliometric-coupled articles concerns the main research topics in this field: the socioeconomic outcomes of microfinance, the dichotomy between social performance and the mission drift of microfinance institutions, and how entrepreneurship and financial innovation, specifically through crowdfunding, mitigate poverty and empower the more vulnerable. The findings reinforce the idea that microfinance constitutes a distinct field of development thinking, and indicate that a more holistic approach should be adopted to boost microfinance outcomes through a better understanding of their beneficiaries. The trends in this field will help policymakers, regulators, and academics to examine the nuts and bolts of microfinance and identify the most relevant areas of intervention.

Poverty Reduction Strategies in Developing Countries

Abstract: The existence of extreme poverty in several developing countries is a critical challenge that needs to be addressed urgently because of its adverse implications on human wellbeing. Its manifestations include lack of adequate food and nutrition, lack of access to adequate shelter, lack of access to safe drinking water, low literacy rates, high infant and maternal mortality, high rates of unemployment, and a feeling of vulnerability and disempowerement. Poverty reduction can be attained by stimulating economic growth to increase incomes and expand employment opportunities for the poor; undertaking economic and institutional reforms to enhance efficiency and improve the utilization of resources; prioritizing the basic needs of the poor in national development policies; promoting microfinance programs to remove constraints to innovation, entrepreneurship, and small scale business; developing and improving marketing systems to improve production; providing incentives to the private sector; and, implementing affirmative actions such as targeted cash transfers to ensure that the social and economic benefits of poverty reduction initiatives reach the demographics that might otherwise be excluded.

Sustainable Microfinance Outreach for Farmers with Blockchain Cryptocurrency and Smart Contracts

Abstract: In the process of cultivation, from the point of deciding to plant a certain crop to the point of selling harvest to the market, farmers incur many expenses at different stages of the crop life cycle. 75% of smallholder farmers around the world includes the world’s poorest. Most of them face constraints in getting finance to cover such costs. Microfinance, a method of offering small loans to the marginal, has evolved as a major institutional source to provide financial facilities to such people. Although there is ample evidence showing that microfinance has a positive impact on economic activities, securing the livelihood of the marginal people by uplifting their economic status, it can be a dilemma at the same time, since the severe indebtedness caused by microfinance loans has led impoverished communities to economic, social, and environmental vulnerabilities. In this paper, we present a blockchain-based conceptual model for sustainable microfinance outreach for farmers where the microfinance institutes can dynamically adjust the loans they provide according to the farmer’s actions resulting in a reduction in severe indebtedness and vulnerabilities while smoothing the crop cultivation process leading to better farm outputs and income.

How Far is Microfinance Relevant for Empowering Rural Women? An Empirical Investigation

Abstract: Abstract Empowerment has been treated as one of the influential poverty alleviation strategies of the day. Various microfinance institutions have emerged with the objective to enhance empowerment, especially for women through different assistance programs. This study attempts to explore the impact of microfinance institutions towards the economic, social, and psychological empowerment of women borrowers using primary data collected through a structured questionnaire from the backward districts of West Bengal, India. In addition, the study also tries to identify the important determinants of empowerment among such borrowers. Applying t-test, logistic, and ordered logistic regression it has been observed that Microfinance Institutions (MFIs) have a significant role towards betterment in the standard of living and empowerment of such women borrowers.

Comprehending the intention to use branchless banking by rural people during the corona pandemic: evidence from Bangladesh

Abstract: The banking sector can take advantage of the proliferation of online banking as well as government’s reinforcement of cashless transactions to expedite the usage of branchless banking. The prime objective of this study is to examine the factors that affect rural people’s bounded rational intention toward branchless banking conduct during this Corona Pandemic in Bangladesh. In doing so, the theory of bounded rational intention was used as its theoretical background. Data (n = 390) were collected from the people residing in the rural areas surrounding branchless banking booths where no branch banking services are available. Data were analyzed employing structural equation modeling by AMOS software. The findings of the study indicate that all factors are positively significant to influence the rural people’s bounded rational intention toward branchless banking behavior. The results also show that trustworthiness and normative structure exhibit the highest positive significance to influence people’s bounded rational intention. It implies that the agents ought to be trustworthy for popularizing the branchless banking services in the rural areas. The outputs of this study provide insight into branchless banking services which will help banks and financial institutions formulate right policy on branchless banking strategy.

Role of MUDRA in Promoting SMEs/MSE, MSMEs, and allied Agriculture Sector in the rural and urban area - To Achieve 5 Trillion Economy

Abstract: Purpose: Pradhan Mantri MUDRA Yojana(PMMY) will offer loans up to 10 lakh to Non- Corporate, Non-farm micro-enterprises to generate income and employment in manufacturing services, retail MSME, SMEs and Agriculture related occupations like beekeeping, horticulture, pisciculture, Poultry, agro-industries, diary, agriclinics, agribusiness, to add to the national wealth with the support of SIDBI, NABARD in providing working capital. The Economic Survey-2020-21 recently tabled in Parliament, has stated that about 54.6 % of the workforce in the country is still engaged in agricultural and allied sector activities(Census2011)as well as Micro, small and medium businesses (MSMEs) have played a major role in India’s economic expansion and Women Empowerment, More than 40 per cent of the nation’s GDP comes from the MSME sector, which is a major source of employment and in the Budge emphasizes MSME and agriculture allied activities. MUDRA act as a refinancing institution to Commercial banks, NBFCs, MFIs, RRBs, SFBs through Shishu, Kishor, Tarun schemes in credit outreach model of delivery is SHGs/JLGs, women entrepreneur and in agriculture allied sectors agripreneurship with development and promotion support to enhance employment opportunities in small and medium-sized enterprises /Micro Small Enterprises (SMEs/MSE) in non –farm activities to achieve US$5 trillion economies microfinance plays a vital role. Design/Methodology/approach: The Research paper is based on secondary statistics collected from different sources such as websites, and published articles. After the literature review and their area gap in the literature and prospect to analyze the role of MUDRA in promoting MSME, SMEs/MSE and Agri. allied sector's funding needs to create a 5 trillion Economy with an ABCD listing framework. Findings/Result: The study discloses that the MUDRA maximum limit for the Schemes is to be enhanced and more awareness is to be created about the MUDRA loan for Agri. allied activity, Agriclinics, and lack of clarity relating to the role in refinancing schemes for Banks by MUDRA, and NABARD to promote SHGs and Agri allied activity. Originality/Value: The Research study was undertaken on the contribution of MUDRA funding needs in terms of working capital to Agri. entrepreneurship in agricultural allied sector activities to enhance employment opportunities in rural and urban areas in India. Paper type: Conceptual Research.

Adoption of Islamic microfinance in Indonesia an empirical investigation: an extension of the theory of planned behaviour

Abstract: Abstract The theoretical framework of the Theory of Planned Behaviour (TPB) has been widely used in analysing behavioural intentions to adopt Islamic finance. However, there is still little research investigating the adoption of Islamic microfinance. This study aims to determine the factors influencing behavioural intentions to adopt Islamic microfinance by developing the Theory of Planned Behaviour (TPB). The development is done by adding religiosity and knowledge variables as antecedents of attitude. A random sample of 262 members of Islamic microfinance. Variance-based partial least-squares structural equation modelling (PLS-SEM) was employed for data analysis. The results show that religiosity and have a significant influence on attitudes. Meanwhile, attitudes, subjective norms, and perceived behavioural control also significantly positively affect behavioural intentions to adopt Islamic microfinance. Then subjective norms greatly determine behavioural intentions to adopt Islamic microfinance. The findings of this study are important for Islamic microfinance to change marketing strategies. Islamic microfinance managers must develop a positive attitude through creating awareness and benefits of Islamic microfinance services by involving community leaders, especially religious leaders.

Impact of Intellectual Capital on Microfinance Institutions’ Efficiency: the Moderating Role of External Governance

Abstract: This study examines the impact of intellectual capital (IC) and its components (human capital, structural capital, and capital employed) on microfinance institutions’ (MFIs) financial and social efficiency. It also determines the moderating impact of external governance on the relationship between IC and MFIs’ financial and social efficiency. It employs the Truncated regression model and Data Envelopment Analysis (DEA), while the Tobit model and Generalized Method of Moments (GMM) were utilized to check the robustness of the estimations. The study uses panel data of 661 MFIs from 86 countries covering 2010–2018 period. The study shows that MFIs are financially efficient rather than socially efficient, albeit MFIs that have high IC can be more financially efficient. Besides, good external governance positively moderates the impact of IC on financial efficiency. The three components of IC have significant effect on MFIs’ financial efficiency, albeit external governance has a significant moderating role on the relationship between value of capital employed and financial efficiency only. As for the social outreach efficiency, this study indicates that IC has a significant positive impact on social outreach efficiency, while external governance has no significant moderating effect on the nexus between IC and MFIs’ social outreach efficiency. The empirical outcomes of this study have useful implications for MFIs’ decision-makers and regulators regarding the need to consider intellectual capital in their quest to enhance the MFIs’ efficiency.

Green Microfinance and Women’s Empowerment: Why Does Financial Literacy Matter?

Abstract: This study investigated the role of financial literacy in the relationship between women’s empowerment and green microfinance. We set a conceptual model with green microfinance as an outcome variable, financial literacy as a mediating variable, and women’s empowerment as an exposure variable. Variance-based SEM was employed for analysis. The results show that the exposure and mediating variables have a significant direct and indirect impact on the outcome variable. The relationship between women’s empowerment and green microfinance is partially mediated by financial literacy. Local wisdom-based financial literacy is found to be an alternative for mainstreaming women’s empowerment in local development. In addition, gender-targeted programs need to consider pro-literacy policies for achieving green microfinance sustainability. By using financial literacy as a mediating variable, this study contributes to the current literature on the relationship between women’s empowerment and green microfinance.

The role of financial technology and entrepreneurial finance practices in funding small and medium-sized enterprises

Abstract: PURPOSE: The traditional sources of financing (bank loans) cannot be treated as an essential source of financing for SMEs in developing countries. For this reason, this group of entities uses many alternative sources, from bootstrapping to microfinance and crowdfunding. During the last decade, a significant contribution in this area has been financial technology. The purpose of this study is threefold: 1) to present the role of financial technologies in financing SMEs, 2) to examine the role of entities based on financial technology in financing SMEs in developing countries, and 3) to consider other non-bank aspects of financing SMEs, leading to the improvement of the financial situation of these entities. The in-depth analysis of these entrepreneurial finance practices will be developed in the following papers presented in this Issue. METHODOLOGY: This study employs a theoretical approach based on a narrative literature review. The primary attention is focused on applying financial technology as a stimulant for the finance of SMEs in developing countries. FINDINGS: As a consequence of the financing gap for SMEs within the traditional financial system, these entities use non-bank financing based on financial technology. The research confirms that financial technology plays a crucial role in fostering the financial situation of SMEs in developing countries and providing greater financial inclusion for these entities. Both, financial technology and enterprises based on this technology contribute significantly to the improvement of efficiency of financing SMEs in emerging markets. They also provide a broader range of services, than were offered by the traditional financial sector. Regarding the other aspects of SME finance, it is essential to implement such ways of financing like microfinance services and crowdfunding. Such funding mechanisms, together with the budget process and the compliance under the conditions of e-tax systems, are important determinants of current entrepreneurial finance. IMPLICATIONS: The paper describes the financing of SMEs in developing countries. The in-depth picture of the SME’s financial situation, focusing on the technological development in this area, provides essential insight into this still poorly explored area. It also offers important premises for shaping the post-pandemic policy to support their further growth. ORIGINALITY/VALUE: Despite growing theoretical and empirical literature about entrepreneurship finance, this study aims to contribute to the role of financial technology in this area. The impact of financial technologies and the role of fintech-based entities on SME activity in developing countries are still poorly researched. Moreover, the research provides a brief overview of other SME funding sources and their determinants in this group of countries.

Does microfinance program innovation reduce income inequality? Cross-country and panel data analysis

Abstract: Abstract This paper uses cross-country and panel data set to test the significance of microfinance on income inequality reduction at the macro level for a sample of 57 developing countries for the periods 2000–2006 and 2007–2013. This study adopts panel data methodologies, such as ordinary least square (OLS), pooled ordinary least square (POLS) and instrumental variables (IV) estimations to overcome the endogeneity problems among the variables. Empirical results show that countries with higher MFIs’ gross loan portfolio per capita tend to have lower income inequality, which confirm the beneficial outcome of microfinance in reducing inequality at the macro level. Moreover, our results suggest that microfinance loans can lead to improve the relative income position of the poor in developing countries, albeit slowly. Our findings have relevant recommendations to policymakers, as they could generate suitable strategies to consider microfinance institutions as a more popular tool for fighting against both poverty and inequality.

Subsidies to microfinance institutions: how do they affect cost efficiency and mission drift?

Abstract: ABSTRACT The costs and benefits of subsidized microfinance are still controversial. We utilize a cost-function estimation approach that accounts for the double bottom line (social and financial) of microfinance institutions (MFIs) to evaluate how subsidies affect both cost efficiency and risk of mission drift. We control for endogenous self-selection into the business models of credit-only versus credit-plus-deposit. Our results suggest that MFIs that both supply loans and collect deposits need no subsidies to be cost-efficient. In addition, subsidies to these MFIs are associated with an increase in deposit size, which might hurt the most disadvantaged depositors. In sum, combining subsidized funds from donors with deposits increases the risk of mission drift, and can therefore be socially undesirable.

Youth Participation in Agricultural Enterprises as Rural Job Creation Work and Its Determinants in Southern Ethiopia

Abstract: Even though agriculture has ample potential to absorb a large number of people, youths tend to stand away from the subsector. As a result, rural job creation works were started in southern Ethiopia by participating youth in different agricultural enterprises in the form of groups and cooperatives. However, as compared to sector potential, youths are not participating in agricultural job creation works in Ethiopia. Therefore, this study was intended to assess factors affecting youth participation in agricultural enterprises in selected districts of Southern Ethiopia. A multistage sampling procedure was followed to select 160 sample youths. The collected data from sampled youths were analyzed by both descriptive statistics and a probit econometric model. Among the agricultural enterprises, the majority of the youths (63.3%) preferred livestock enterprises indicating livestock sector job creation capacity in Ethiopia. The seasonal nature of agricultural income, fear of agricultural risk, and lack of initial capital were the top three factors hindering youth participation in the agricultural enterprise as rural job creation works. The probit model result shows that, among the hypothesized variables, education level, credit getting bureaucracy, lack of initial capital, fear of the group, risk and uncertainty, and lack of working place determine significantly youth participation in agriculture enterprises. Hence, respective bodies must group youths based on their preferred interest and evaluate their business plan critical before credit disbursement, while solving credit providing terms problems on the microfinance side and the introduction of agricultural insurance through these youth agricultural enterprises for agricultural risk fear needs stakeholders’ interventions. Overall, initial savings, interest rate, and payback period of credit need special policy adjustments to increase youth participation in an agricultural enterprise.

Can microfinance-backed entrepreneurship be a holistic empowerment tool for women? Empirical evidence from Kashmir Valley, India

Abstract: Purpose This study investigates the effectiveness of microfinance-backed entrepreneurship as a mechanism for the holistic empowerment of women. Design/methodology/approach This study employs a mixed-method research-design consisting of quasi-experimental design (quantitative approach) involving women, both entrepreneurs (132) and non-entrepreneurs (238), as well as in-depth semi-structured interviews (qualitative approach). Findings Quantitative analysis revealed that female entrepreneurs are better off than female non-entrepreneurs in terms of economic, social, political and psychological indicators of empowerment. However, relatively lesser impact was found in terms of political, and to an even smaller extent, social empowerment of women. Analysis of in-depth interviews corroborated these findings confirming that entrepreneurship serves as an effective tool for the holistic empowerment of women. However, non-entrepreneurs also exhibit social empowerment. Research limitations/implications Given the restricted geographical ambit of the study, prudence ought to be exercised in drawing inferences applied to alternate contexts. That the vast majority of questionnaire respondents are illiterate presented a notable impediment in the process of collection of accurate responses. Practical implications Microfinance intervention ought to be specifically directed to cultivating entrepreneurship among women; in particular, to achieve the full benefits of empowerment, women availing microfinance ought to exert full control over their own business ventures. Originality/value In analyzing holistic empowerment through microfinance supported businesses set up by women, the study adds to the existing literature on women entrepreneurship and empowerment.

Female participation and financial performance of microfinance institutions: Evidence from transition economies

Abstract: Motivation Although female clients are the main target of most Microfinance Institutions (MFIs), male–female workforce ratio in microfinance operations is not proportionate. There is a consensus that a greater female presence in the workforce at all hierarchical levels could enhance the financial performance of MFIs thanks to women’s tougher commitments and better managing capacity. Purpose There is scarce research investigating which hierarchical levels of female workforce contribute to MFIs’ financial performance. This study aims at filling this gap by jointly analysing the effect of female participation at all hierarchical levels of MFIs, which is relatively rare in the existing literature, especially in microfinance. Methods and approach We use data from 172 MFIs in Eastern Europe and Central Asian countries (EECA) for the period 1996–2014. The data were then analysed by ordinary least squares, fixed, and random effects models, along with several diagnostic tests. Findings We find that female board members and female clients contribute positively to the financial performance of MFIs. The literature presents these outcomes as being due to women’s’ better organizational and monitoring techniques, and more responsible use of loans, respectively. However, our analysis shows that female managers and loan officers may impair financial performance to some extent, possibly because they face cultural limitations and safety obstacles, resulting in their being less persuasive and effective than men, especially in the process of collecting arrears payments. Policy implications Our study suggests that MFIs in the EECA context may improve their financial sustainability by reconsidering their organizational choices, such as operational recruitment, placing women at the top of the decision-making process. At the lower levels of the hierarchy, particularly loan officers, it would be advisable to support them in the interaction with male customers, so that they can adopt more effective techniques in the loan collection phases. MFIs can also scale up their loan activities to more women since their representation in the client base is relatively low in the EECA region.

Linkages between social and financial performance: Evidence from Sub-Saharan Africa microfinance institutions

Abstract: Microfinance Institutions provide financial services to low-income clients and the poor who are excluded from formal financial institutions. Hence, the sustainability of microfinance institutions (MFIs) remains essential. This study examines the relationship between social and financial performance and whether there is a trade-off between both objectives after the 2008 global financial crisis. The study used 735 observations from 105 Microfinance Institutions across 26 countries in Sub-Saharan Africa from 2011 to 2017 and employed the Generalized Method of Moment and Seeming Unrelated Regression for the analyses. The results indicate that increasing the number of customers [breadth of outreach increased the financial performance (return on equity)]. The result also showed that the Percentage of Female Borrowers contributes to the sustainability of Microfinance Institutions due to their higher loan repayment rate than males. In addition, our results document a trade-off between the Depth of Outreach and Operational Self-Sustainability among Microfinance Institutions. The study recommends the following: 1) Microfinance institutions should purposefully increase credit facilities extended to female borrowers since that will make them sustainable. 2) Governments in Sub-Saharan African countries should provide increased financial support in the form of subsidies and tax holidays to Microfinance Institutions operating in very deprived areas, and 3) Management of Microfinance institutions on the continent should regularly re-train and upgrade their staff capacity to effectively assess and manage customers before and after extending credit to them to sustain the industry.

Enhancing SME contribution to economic development: A perspective from an emerging economy

Abstract: Small-medium enterprises (SMEs) have a huge and not fully maximized potential to address the socio-economic challenges that emerging economies are facing. This study assessed the contributions of SMEs in an emerging economy, using ADANCO version 2.0 of the partial least square structural equation model (PLS-SEM). A pre-tested structured questionnaire was used to collect data from 375 employees of SMEs in the fashion, microfinance, and hospitality sectors in four major business regions in Ghana, namely the Greater Accra, Central, Western and Ashanti Regions. The results reveal that SMEs continue to provide maximum support and contributions to Gross Domestic Product (GDP), as well as employ about 70 percent of the entire working population. The study recommends that SMEs should receive greater attention from the government through appropriate tailor-made policies to support and assist them to unleash their full potential to enhance economic growth.

Factors Affecting Small and Micro Enterprise Performance with the Mediating Effect of Government Support: Evidence from the Amhara Region Ethiopia

Abstract: This paper aims to examine Factors Affecting Small and Micro Enterprise Performance with the Mediating Effect of Government Support; Evidence from Amhara Region Ethiopia. This study used both qualitative and quantitative research methodology. The proposed research model used a Structural equation model, growth path modeling analysis, and correlation matrix. The study also used both primary and secondary data sources. The study employed 384 determined entrepreneur leader and employee respondents through purposive sampling techniques and simple random sampling to estimate the required clusters. The findings of the study show that the mediating role of government support affects the independent variables by 0.971 *** enterprise performance. Moreover, the independent variables entrepreneur competence, 0.841 ***, microfinance, =0.714 **, infrastructure, 0.861 ** and entrepreneur training 0.831 ** have a positive and significant impact on enterprise performance. Microfinance and entrepreneur training are major factors that influence the enterprises’ performance next to the mediating role of government support. Therefore, the Small and micro enterprise besides government supporting role have gaps in enterprises’ performance due to lack of long-term loans, access to lease machines, unfair interest rates, production and selling the place, shortage of defining SMEs, and structural limitations. To solve currently existing limitations, the regional government should take policy measures to supply long-term loan financing, access to lease machines, fair interest rate, and working and selling places through a cluster management approach, re-define and restructure the existing SMEs strategy. This study suggests to executives, policymakers, SMEs, and microfinance to use the for enterprises’ performance based on the proposed recommendation. Further research should be conducted for knowledge gap of the field in the study area.

Aggregating Distributional Treatment Effects: A Bayesian Hierarchical Analysis of the Microcredit Literature

Abstract: Expanding credit access in developing contexts could help some households while harming others. Microcredit studies show different effects at different quantiles of household profit, including some negative effects; yet these findings also differ across studies. I develop new Bayesian hierarchical models to aggregate the evidence on these distributional effects for mixture-type outcomes such as household profit. Applying them to microcredit, I find a precise zero effect from the fifth to seventy-fifth quantiles, and uncertain yet large effects on the upper tails, particularly for households with business experience. These quantile estimates are more reliable than averages because the data are fat tailed. (JEL G21, G51, L25, O16, P34)

The Impact of Urban Culture on Street Vending: A Path Model Analysis of the General Public's Perspective

Abstract: This study examined the relationship between urban culture and street vending. Prior research on this topic is limited and inconclusive. Therefore, we have proposed an integrated model to test the positive effect of urban culture on street vending using multiple mediations of consumption patterns, resistance, and microfinance. We tested a sample of 425 responses that reflect the public opinion in Baghdad, Iraq. These responses were collected between September and November 2018. A partial least squares–based structural equation modeling is employed to test the validity of measurement models and the significance of the entire structural model, predictive power, and mediation analysis. We found that resistance mediates the effect of urban culture on street vending; low-income consumption and resistance sequentially mediate the effect of urban culture on street vending, while resistance mediates the effect of a lack of microfinance on street vending. The direct impact of culture on street vending is not significant, and a lack of microfinance positively influences the pervasiveness of trading on streets. This study contributes to the extant literature as it proposed and tested a novel and comprehensive model to analyze the relationship between urban culture and street vending, simultaneously examining the effects of culture, consumption, resistance, and microfinance on street vending.

Does microfinance program innovation reduce income inequality? Cross-country and panel data analysis

Abstract: Abstract This paper uses cross-country and panel data set to test the significance of microfinance on income inequality reduction at the macro level for a sample of 57 developing countries for the periods 2000–2006 and 2007–2013. This study adopts panel data methodologies, such as ordinary least square (OLS), pooled ordinary least square (POLS) and instrumental variables (IV) estimations to overcome the endogeneity problems among the variables. Empirical results show that countries with higher MFIs’ gross loan portfolio per capita tend to have lower income inequality, which confirm the beneficial outcome of microfinance in reducing inequality at the macro level. Moreover, our results suggest that microfinance loans can lead to improve the relative income position of the poor in developing countries, albeit slowly. Our findings have relevant recommendations to policymakers, as they could generate suitable strategies to consider microfinance institutions as a more popular tool for fighting against both poverty and inequality.

Employee tenure and staff performance: The case of a social enterprise

Abstract: The literature on social enterprises has largely examined tradeoffs at the organizational level. In this study, we examine tradeoffs at the employee level. By analyzing the case of an Ecuadorian microfinance institution, we show that the tenure of social enterprise employees affects individual social and financial performance differently: the relationship between tenure and social performance is positive, whereas the relationship between tenure and financial performance is an inverted U-shape. Furthermore, our results suggest that social enterprise employees with the longest tenure are the least inclined to experience tradeoff tensions.

Does Islamic microfinance contribute to economic empowerment in Tunisia?: a case study of Zitouna Tamkeen

Abstract: PurposeIslamic microfinance is a substantial tool for poverty alleviation and economic empowerment. The paper aims at accessing the potential of Islamic microfinance for the purpose of achieving the economic empowerment in Tunisia.Design/methodology/approachA structured questionnaire survey method is used. The method is intended for some of the beneficiaries of Zitouna Tamkeen (ZT), the only Islamic microfinance institution in Tunisia. Responses are analyzed using the statistical package for the social sciences program.FindingsThe authors infer that though the Islamic and conventional microfinance have similar objectives, the methods are different. What is more, the economic empowerment requires not only financial inclusion and entrepreneurship, but also skill development. The results of the survey reveal that ZT has contributed to certain economic empowerment of most of ZT's beneficiaries. In addition, the authors bring to the fore that providing supportive infrastructure and investment is a prominent component of the economic empowerment process.Research limitations/implicationsIn the paper, the sample is limited.Practical implicationsThe authors have highlighted that some structural barriers to entrepreneurship – such as legal, operational and marketing challenges – need to be addressed in a practical way.Originality/valueThis paper establishes the relationship between the Islamic microfinance and economic empowerment. The current paper is the first investigation in this field in Tunisia.