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2. Breaking the Bonds of Poverty: Effectiveness of Microcredit in Improving the Wellbeing of Brick Kilns’ Laborers in Pakistan
- Author:
- Jafar Riaz Kataria, Ahmed Usman, Shabbir Hussain, Muhammad Usman, and Aaisha Amjad
- Publication Date:
- 01-2018
- Content Type:
- Journal Article
- Journal:
- South Asian Studies
- Institution:
- Department of Political Science, University of the Punjab
- Abstract:
- This study examines the effectiveness of microcredit to enhance family income, eradicate peshgi and improve the wellbeing of brick kiln laborers. A survey was carried out to determine the effectiveness of microcredit among laborers working at brick kilns located in Lahore and Kasur districts. Linear regression analysis was run at 418 cases to track patterns in the data. The results of study indicated that microcredit significantly increased the family income, eradicated peshgi and improved the wellbeing of borrowers. Furthermore, segregated data indicated that female, married, aged, illiterate, beneficiaries having 6 and above children, beneficiaries having 9 and above family members, family income more than 20001, family expenditures more than 20001, beneficiaries who consulted their families and repeaters experienced higher benefits of microcredit scheme. The researchers recommend increasing the microcredit access to the poor people living in urban slums and rural areas, where the facility of formal lending institutions is lower and people are forced to take peshgi (advance) for meeting their basic needs.
- Topic:
- Development, Economics, Labor Issues, and Microcredit
- Political Geography:
- Pakistan, South Asia, and Punjab
3. Targeting credit through community members
- Author:
- Diego A. Vera-Cossio
- Publication Date:
- 11-2017
- Content Type:
- Working Paper
- Institution:
- Institute for Advanced Development Studies (INESAD)
- Abstract:
- Delegating the allocation of public resources to community members is an increasingly popular form of delivering development programs and are associated with a tradeoff between improved information about potential beneficiaries and favoritism towards local elites. Unlike targeting cash transfers to the poor, the optimal targeting of credit is a more complex problem involving issues of productivity, repayment, and market responses: This paper analyzes this problem using a large-scale lending program, the Thai Million Baht Credit Fund, which decentralizes the allocation of loans to an elected group of community members, and provides three main results. First, exploiting a long and detailed panel, I recover pre-program structural estimates of household total factor productivity and find that resources from the program were not allocated to high-productivity, poor households, which is inconsistent with poverty and productive efficiency as targeting criteria. Second, using socioeconomic networks data, I show that actual targeting is strongly driven by connections to village elites and is related to lower program profitability, which suggests favoritism as a reason for mistargeting. Finally, I exploit quasi-experimental variation in the rollout of the program and uncover evidence that, in general equilibrium, informal credit markets compensate for targeting distortions by redirecting credit towards unconnected households, albeit at higher interest rates than those provided by the program. The results highlight the limitations of community-driven approaches to program delivery and the role of markets in attenuating potential targeting errors.
- Topic:
- Development, Economics, Microcredit, Public Sector, Local, Microeconomics, and Credit
- Political Geography:
- Thailand
4. Leftist Politics and the Limits of Microcredit in Argentina
- Author:
- Ronald Ahnen
- Publication Date:
- 06-2017
- Content Type:
- Journal Article
- Institution:
- German Institute of Global and Area Studies
- Abstract:
- The success of microcredit lending programs depends in part on the regulatory framework that policymakers create to support them. A fact that many microcredit analyses often ignore or overlook is that this framework is shaped by both ideological and partisan political considerations of policymakers. In Argentina, the Peronist governments of Néstor and Cristina Kirchner launched and supported a state-centered microcredit program characterized by strict loan conditions and direct state grants for capital and operational costs to existing non-profit organizations that were largely supportive of Peronism. Provinces and municipalities governed by anti-Peronists refused to participate. As a result, the National Microcredit Program has come to mimic past patronage based policies to a significant extent, engendering dependency on government resources, and thereby threatening its long-term viability. This article explores the impact of the left’s ideological and political project on microcredit policy, implementation, and outcomes in Argentina.
- Topic:
- Regulation, Microcredit, Leftist Politics, and Credit
- Political Geography:
- Argentina, South America, and Latin America