Group Versus Individual Liability


Book Description

Group liability is often portrayed as the key innovation that led to the explosion of the microcredit movement, which started with the Grameen Bank in the 1970s and continues on today with hundreds of institutions around the world. Group lending claims to improve repayment rates and lower transaction costs when lending to the poor by providing incentives for peers to screen, monitor, and enforce each other's loans. However, some argue that group liability creates excessive pressure and discourages good clients from borrowing, jeopardizing both growth and sustainability. Therefore, it remains unclear whether group liability improves the lender's overall profitability and the poor's access to financial markets. The authors worked with a bank in the Philippines to conduct a field experiment to examine these issues. They randomly assigned half of the 169 pre-existing group liability 'centers' of approximately twenty women to individual-liability centers (treatment) and kept the other half as-is with group liability (control). We find that the conversion to individual liability does not affect the repayment rate, and leads to higher growth in center size by attracting new clients.




Microfinance Institutions


Book Description

Research on MFI performance is still in its infancy. MFIs are hybrid organizations with dual objectives. Performance studies in microfinance are therefore less straightforward compared to performance studies in traditional banking research. This book contains new MFI performance research by top scholars from across the globe.







The Economics of Microfinance


Book Description

An assessment of "the microfinance revolution" from an economics perspective that draws on lessons from academia and international practice to challenge conventional assumptions.




Borrowing Together


Book Description

This book is about microfinance in rural China and how the villagers cultivated their social relationships by moving money.




The Theory of Credit Contracts


Book Description

In this book Christian Prem features new innovations on several levels. On a conceptual level he presents a complete restructuring and modularisation of the field of lending theory. On a formal level he bestows great care on providing precise definitions and promotes notational standardisation. On a technical level the development of an algorithm to solve repayment games automatically is thoroughly documented. Eventually, new theoretic results on the performance of various credit schemes are established, the quality of existing lending schemes is scrutinised and new more efficient mechanisms are presented. The content therefore inspires theorists as well as it provides well-grounded advice to practitioners in the lending industry. Altogether this thesis is a major step towards improving the quality and applicability of lending theory.




Participatory Poverty Assessment


Book Description

This report aims to help understand the qualitative aspects of poverty from the point of view of the poor, toward a better understanding of how to design programs to reduce it. Drawings around the theme of poverty, done by Mongolian children for this project, help illustrate the issues and the childrens' responses to them. The book is copublished with Mongolia's National Statistics Office and the World Bank and the study was funded by the Netherlands National Poverty Reduction Fund.




Grameen Bank


Book Description

World Bank Technical Paper No. 295. The progress made by the countries of Central and Eastern Europe in privatizing state-owned enterprises has created millions of new shareholders. But for the citizenry to buy and sell shares, these countries must develop stock markets and related institutions such as brokerages, clearing and settling organizations, and regulatory agencies. This paper examines the role of capital markets in the new market economies of Central and Eastern Europe and to what extent governments in the region should encourage the development of such markets. The authors address questions of whether the capital markets will serve merely as a forum for trading stocks or become a source of new equity capital to help restructure the enterprises of the region and whether governments should take a hands-off approach by letting the necessary institutions develop as they are needed or should actively create stock exchanges and establish the overall legal and regulatory framework.




School Meals, Educational Achievement, and School Competition


Book Description

Vermeersch and Kremer examine the effects of subsidized school meals on school participation, educational achievement, and school finance in a developing country setting. They use data from a program that was implemented in 25 randomly chosen preschools in a pool of 50. Children's school participation was 30 percent higher in the treatment group than in the comparison group. The meals program led to higher curriculum test scores, but only in schools where the teacher was relatively experienced prior to the program. The school meals displaced teaching time and led to larger class sizes. Despite improved incentives, teacher absenteeism remained at a high level of 30 percent. Treatment schools raised their fees, and comparison schools close to treatment schools decreased their fees. Some of the price effects are caused by a combination of capacity constraints and pupil transfers that would not happen if the school meals were ordered in all schools. The intention-to-treat estimator of the effect of the randomized program incorporates those price effects, and therefore it should be considered a lower bound on the effect of generalized school meals. This insight on price effects generalizes to other randomized program evaluations. This paper--a product of the Poverty Reduction and Economic Management 2, Africa Technical Families--is part of a larger effort in the region to increase our understanding of the impact of programs aimed at reaching the Millennium Development Goals.




Reaching Out


Book Description

"The authors (1) present new indicators of banking sector penetration across 99 countries based on a survey of bank regulatory authorities, (2) show that these indicators predict household and firm use of banking services, (3) explore the association between the outreach indicators and measures of financial, institutional, and infrastructure development across countries, and (4) relate these banking outreach indicators to measures of firms' financing constraints. In particular, they find that greater outreach is correlated with standard measures of financial development, as well as with economic activity. Controlling for these factors, the authors find that better communication and transport infrastructure and better governance are also associated with greater outreach. Government ownership of financial institutions translates into lower access, while more concentrated banking systems are associated with greater outreach. Finally, firms in countries with higher branch and ATM penetration and higher use of loan services report lower financing obstacles, thus linking banking sector outreach to the alleviation of firms' financing constraints. "--World Bank web site.