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1. Creating a Micro, Small, and Medium Enterprise Focused Credit Risk Database in India: An Exploratory Study

Author:
Savita Shankar
Publication Date:
03-2021
Content Type:
Working Paper
Institution:
Center for the Advanced Study of India
Abstract:
Despite being the focus of numerous policy initiatives, the credit gap of the MSME sector in India has been persistent. An investment in tapping the data being generated by lenders to build a database to inform future lending is likely to improve the quality of lending decisions over time. This, in turn, has the potential to further expand MSME loan access and reduce MSME borrowing costs. To realize this objective, a credit risk database (CRD) has been found to play a useful role in catalyzing collateral and guarantee free loans for SMEs in Japan. The availability of the OCEN network and the account aggregator framework offers an opportunity to create a CRD involving banks and NBFCs at relatively low incremental cost. The CRD’s role will be distinct from that of credit bureaus and rating agencies as it is based on financial and default data for the sector as a whole, rather than for individual entities. The main benefits of CRD include the development of credit scoring models based on nationwide data and the availability of benchmarks for different segments of the MSME sector. Additional benefits are that the credit scores from the models could be used to develop a more sophisticated pricing mechanism for guarantees and for potentially aiding MSME loan securitizations
Topic:
Microcredit, Risk, Credit, and Resource-Backed Loans
Political Geography:
India

2. The Future Of Microfinance

Author:
Muhammad Yunus
Publication Date:
06-2020
Content Type:
Commentary and Analysis
Institution:
Brown Journal of World Affairs
Abstract:
Muhammad Yunus is an economist and the founder of Grameen Bank, which provides microcredit to the impoverished without requiring collateral. Yunus and Grameen were awarded the Noble Peace Prize in 2006.
Topic:
Development, International Trade and Finance, Capitalism, Finance, and Microcredit
Political Geography:
Global Focus

3. Effects of interest rate caps on microcredit: evidence from a natural experiment in Bolivia

Author:
María José Roa, Alejandra Villegas, and Ignacio Garrón
Publication Date:
09-2020
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
This paper evaluates the imposition of caps on microcredit lending rates through directed credit policies for productive sectors. This financial inclusion intervention provides a unique quasi-experiment, allowing to estimate its causal effect following a difference-in-differences analysis. Our results suggest that the imposition of interest rate ceilings negatively affected the portfolio balance of new microcredits and loans to SMEs granted by MFIs. Particularly, we find robust results indicating that the balance of the microcredit and SME loans portfolio granted by MFIs, relative to the company portfolio granted by banks, decreased by 26.1% for an average MFI for the period 2011-2018.
Topic:
International Political Economy, Microcredit, Credit, and Lending
Political Geography:
Latin America and Bolivia

4. Economic Empowerment to Address Gender-Based Violence

Author:
SVRI
Publication Date:
11-2019
Content Type:
Policy Brief
Institution:
The Sexual Violence Research Initiative (SVRI)
Abstract:
Poverty is a risk factor associated with gender-based violence; it also often intersects with and reinforces gender inequality. Various microfinance and other economic empowerment approaches have been implemented to try to address this intersection.
Topic:
Economics, Gender Issues, Poverty, Women, Gender Based Violence, and Microcredit
Political Geography:
Bangladesh, Egypt, and Global Focus

5. 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

6. 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

7. 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

8. Impact of Microcredit Scheme on Socio-economic Status of Farmers (A case study of PRSP in District Gujranwala)

Author:
Muhammad Alam, Raza Ullah, Ali Iqtidar Mirza, Waqar Saleem, Mehboob Elahi, and Hamid Sultan
Publication Date:
07-2014
Content Type:
Journal Article
Journal:
South Asian Studies
Institution:
Department of Political Science, University of the Punjab
Abstract:
Pakistan is an agricultural country and the majority of the population belongs to rural areas, therefore rural sector is the main source of economic development and manpower in the country. The development of rural areas is essential for the enhancement of agriculture sector and for the betterment of rural communities. The aim of the present study was to find the impact of microcredit on socio- economic status and living standards of the farmers in rural areas of district Gujranwala. The universe for the present study was all farmers who got loan from the Punjab Rural Support Program in district Gujranwala for agricultural purpose. The Sample of 185 respondents was selected from the targeted population using the simple random sampling technique. A survey was conducted to carry out the study in which a close ended structured questionnaire was developed to collect data from the farmers. Both descriptive and inferential statistics were used to draw the results from the study. Through descriptive analysis, the study clearly demonstrated that microcredit has played a positive role in improving the socioeconomic status of farmers after getting the loan. In this regard the study observed that microcredit played the positive role in changing and improving the living standards, diet patterns, health status and childrens education of the respondents. Chi square test was used to test the proposed hypothesis of the study and to verify the association between variables. The results of the Chi square test revealed that there was a significant impact of microcredit in improving socioeconomic status and household living standard of the farmers.
Topic:
Agriculture, Health, Microcredit, Dietary Habits, Farmers, and Standard of Living
Political Geography:
Pakistan and South Asia

9. Journal of Public and International Affairs 2013

Author:
Greg Rosalsky, Sarah Schleck, Nathaniel D. F. Allen, Ezra Levin, Alex Penwill, Farzan Sabet, Daniel Tam-Claiborne, Albert Trithart, Mark Walker, Ben Grubb, and Gloria Twesigye
Publication Date:
05-2013
Content Type:
Journal Article
Journal:
Journal of Public and International Affairs (JPIA)
Institution:
School of Public and International Affairs (SPIA), Princeton University
Abstract:
The nine articles in this volume were chosen from over 150 submissions through a blind-selection process in Princeton. After individually reading a large number of submissions, attending editors first voted for their favorite papers via secret ballot, and we then facilitated an open debate to winnow down these choices to the cream of the crop. In the intervening months before publication, editors in Princeton from relevant policy areas worked with the authors to fact-check their work and fine-tune their arguments. While their geographic foci and policy subjects are multifarious, all the authors in this edition share a passion for changing the world through better policy. Whether it is women’s health issues in Tanzania, banking regulation in the European Union, diplomacy with Iran over its nuclear ambitions, or immigration policy in the United States, the authors implore global policymakers to change course in order to remedy contemporary problems in public affairs. This dedication to making the world a better place through public policy, in addition to demonstrating first-rate scholarship, make us proud to showcase these articles.
Topic:
Health, Nuclear Weapons, Politics, Foreign Aid, Governance, Nuclear Power, Democracy, Economy, Arms Trade, and Microcredit
Political Geography:
Africa, China, Iran, Tanzania, Honduras, Mali, Niger, and United States of America

10. Building a Viable Microfinance Sector in Afghanistan

Author:
Paula Kantor and Erna Andersen
Publication Date:
01-2010
Content Type:
Policy Brief
Institution:
Afghanistan Research and Evaluation Unit (AREU)
Abstract:
AREU research on the impact of microcredit on informal credit systems and rural livelihoods illustrated the viability challenges microfinance institutions (MFIs) and their clients were facing. This briefing paper examines the changes the microfinance sector is undertaking, such as the introduction of more reliable business plans, creating internal audit units to improve control systems and reduce opportunities for fraud, and institutionalising an MFI report card system, to improve performance.
Topic:
Finance, Business, Microcredit, and Credit
Political Geography:
Afghanistan and Middle East