Optimal sources of financing for microfinance institutions in sub-Saharan Africa

This article studies the relationship between different sources of finance and the financial performance of microfinance institutions in 36 sub-Saharan African countries. The analysis is based on a panel dataset of 471 microfinance institutions over the period 1995 to 2012. By applying the GMM estimator, the results suggest that first, there is a positive and robustly significant relationship between equity and the financial performance of microfinance institutions; and second, debt and microsavings negatively affect the financial performance of microfinance institutions in the sub-Saharan African region. Therefore, the optimal source of finance for microfinance institutions in sub-Saharan Africa is equity. More importantly, the policy recommendation is that private or public partners must support MFIs financially; doing so could contribute to extending financial services to the poor in sub-Saharan Africa.     

Building assets to reduce vulnerability: microfinance provision by a rural working people's union in Mexico

Proyecto Tequisquiapan (PT) provides protective microfinance services in a small region of rural Mexico, including, importantly, open access to deposit facilities. The authors report on new research which examined PT's record in enabling people with different degrees of vulnerability to build assets and protect themselves from both sudden shocks and more predictable demands for lump sums of cash. Proyecto Tequisquiapan was found to be relatively more useful for the most vulnerable households. Its successes rely on its small scale and on the commitment of its staff, whose salaries are subsidised, to innovation and experimentation in order to remain relevant to members' changing and differentiated financial lifeworlds. This stands in contrast to the current trend towards large‐scale commercialised microfinance. The World Bank, the authors argue, should take note.     

Evaluation of microfinance projects

This paper criticizes the quick system proposed by Henk Moll for evaluating microfinance projects in the article ?How to Pre-Evaluate Credit Projects in Ten Minutes?. The author contended that there is a need to emphasize the objectives of the project. The procedure used by Moll, he contended, is applicable only to projects that have only two key objectives, such as credit operations, and the provision of services. Arguments are presented on the three specific questions proposed by Moll, ranging from the availability of externally audited financial reports, the performance of interest rate on loans vis-a-vis the inflation rate, and the provision of loans according to the individual requirements of the borrowers. Lastly, the author emphasizes that the overall approach is not useful and suggests that careful considerations should be observed in the use or abuse of a simple scoring system or checklist such as the one proposed by Moll.     

Women's economic empowerment through microfinance in Cambodia

The use of microfinance to enhance income generation and job opportunities among the poor is a popular tool for governments and non-governmental organisations involved in raising standards of living in developing countries. Providing very poor families with small loans to invest in their micro enterprises, Village Bank empowers them to create their own jobs, increase their incomes, and increase their families' well-being. As women are more likely to spend the majority of their personal incomes on improving the family situation, this economic empowerment greatly benefits their children, who are generally more likely to attend school and have better nutrition.

Autonomisation économique des femmes à travers le microfinancement au Cambodge

L'utilisation du microfinancement pour améliorer la génération de revenus et les possibilités de travailler parmi les pauvres est un outil puissant pour les gouvernements et les organisations non gouvernementales qui tentent d'améliorer le niveau de vie dans les pays en développement. Les Banques villageoises, en fournissant aux familles pauvres des prêts destinés à être investis dans des microentreprises, confèrent à ces familles les moyens de créer leurs propres emplois, d'accroître leurs revenus et d'améliorer leur bien-être. Comme les femmes sont plus susceptibles de consacrer la majeure partie de leurs revenus personnels à améliorer la situation de la famille, cette autonomisation économique profite considérablement à leurs enfants, lesquels ont ainsi généralement plus de chances d'être scolarisés et mieux nourris.

Empoderamento econômico das mulheres através de microfinanças no Camboja

O uso de microfinanças para aumentar a geração de renda e oportunidades de trabalho entre os pobres é uma ferramenta popular para governos e organizações não-governamentais envolvidos em elevar os padrões de vida nos países em desenvolvimento. Oferecendo a famílias muito pobres pequenos empréstimos para que invistam em suas microempresas, o Village Bank as empodera para criar seus próprios empregos, aumentar suas rendas e intensificar o bem-estar de suas famílias. Como é mais provável que as mulheres gastem a maioria de suas rendas pessoais para melhorar a situação da família, este empoderamento econômico beneficia imensamente seus filhos pois, em geral, é mais provável que eles frequentem a escola e tenham uma melhor nutrição.

El empoderamiento económico de la mujer mediante microfinanzas en Camboya

Las microfinanzas son un mecanismo muy utilizado por los gobiernos y las organizaciones no gubernamentales para elevar los niveles de vida en los países en desarrollo dado que estimulan la generación de ingresos y crean más oportunidades de empleo entre los pobres. A través de pequeños préstamos para la inversión en microempresas, el Banco Village ofrece la posibilidad de que las familias más pobres generen sus propios empleos, aumenten sus ingresos y eleven su nivel de bienestar. Dado que son las mujeres las que invierten la mayor parte de sus ingresos personales en mejorar la situación de sus familias, su empoderamiento económico aporta grandes beneficios para los hijos, quienes en general tienen niveles más elevados de asistencia escolar y de nutrición.     

Women,microfinance, and savings: Lessons and proposals

Microfinance--both credit and savings--has potential to improve the well-being of poor women in developing countries. This paper explores practical ways to achieve that potential. Based on lessons from informal savings mechanisms that women already use, the paper proposes two savings services designed to address the development issues that confront women. The proposals call for safe-deposit boxes and for matched-savings accounts for healthcare or education.     

Gender impact assessment in microfinance and microenterprise: why and how

This article discusses the reasons for conducting gender impact assessment in microfinance and microenterprise. Although women are increasingly being targeted in microfinance and microenterprise projects, this does not necessarily mean that gender relations are being taken into account. Rather, targeting women raises a host of questions about the context in which women are operating their businesses or handling finance. Assessing gender impact in microfinance and microenterprise can help answer the questions in order to understand whether women are able to use the services and make the anticipated improvements in their livelihoods. Moreover, several approaches are suggested: 1) establish a gender baseline; 2) consider the potential impacts of the project on gender relations; 3) establish the information and indicators required; and 4) collect and analyze the data using tools and techniques appropriate to the task. However, in the context of gender relations there remains much ground, which often cannot be openly discussed. The discussion of how people organize their financial and economic affairs inside the household is usually a delicate area. Hence, it is suggested that such matters should be handled very carefully and to consider the composition and dynamics of the research team itself.     

Reciprocal relationship of social capital and microfinance activities in Nyanga,Zimbabwe

This article investigates the interactive reciprocal relationship of microfinance activities and social capital among members of the Kufusa Mari microfinance scheme in Nyanga, Zimbabwe. It reports on a study conducted among 146 randomly selected respondents, plus other participants selected for focus group discussions and key informant interviews. A reciprocal relationship between microfinance activities and social capital existed in this case study, but was found to be three-pronged, also involving developmental goals. The community should be encouraged to join the Kufusa Mari group scheme to promote self-initiated grassroots community development and advancement.     

A comparative analysis of microfinance and conditional cash transfers in Latin America

This paper addresses the question of whether microfinance and conditional cash transfers can be effective in alleviating poverty in the Latin American region, and provides a comprehensive assessment of each of these programmes using data and evaluation reports from 19 countries in the Latin American region, analysed in the context of six operational and impact criteria. The research shows that microfinance may be better suited for those living on US$2 per day or higher, while conditional cash transfers may be more beneficial for those living in extreme poverty. Neither programme offers a ‘magic bullet’ solution for poverty eradication, but they can provide positive outcomes when prescribed in combination.

Une analyse comparative du microfinancement et des transferts conditionnels d'argent en Amérique latine

Ce document se penche sur la question de savoir si le microfinancement et les transferts conditionnels d'argent peuvent être efficaces au moment d'atténuer la pauvreté et il fournit une évaluation complète de chaque programme, en utilisant des données et des rapports d'évaluation provenant de dix-neuf pays de la région, analysés dans le contexte de six critères opérationnels et relatifs à l'impact. D'après les résultats des recherches, il est possible que le microfinancement convienne mieux à ceux qui vivent avec 2 dollars EU par jour ou plus, tandis que les transferts conditionnels d'argent pourraient profiter davantage à ceux qui vivent dans des conditions de pauvreté extrême. Aucun de ces deux types de programmes ne fournit une solution « balle magique » pour l'éradication de la pauvreté, mais ils peuvent donner des résultats positifs lorsqu'ils sont prescrits en tandem.

Uma análise comparativa de microfinanças e transferências condicionais de dinheiro na América Latina

Este artigo busca examinar se as microfinanças e as transferências condicionais de dinheiro podem ser eficientes para aliviar a pobreza e oferece uma avaliação abrangente de cada programa utilizando dados e relatórios de avaliação de dezenove países da região, analisados no contexto de seis critérios operacionais e de impacto. A pesquisa mostra que a microfinança pode ser mais adequada para aqueles que vivem com US$2 por dia ou mais, enquanto que as transferências condicionais de dinheiro podem ser mais benéficas para aqueles que estão vivendo em condições de pobreza extrema. Nenhum programa oferece uma solução “mágica” para a erradicação da pobreza, mas eles podem oferecer resultados positivos quando prescritos em conjunto.

Un análisis comparativo de las microfinanzas y las transferencias de efectivo condicionadas en América Latina

Este ensayo analiza si las microfinanzas y las transferencias de efectivo condicionadas pueden contribuir a la reducción de la pobreza y ofrece una evaluación completa de las dos modalidades. Utiliza para ello datos e informes de evaluación de 19 países de la región y analiza los resultados a la luz de seis criterios operativos y de impacto. La investigación demostró que las microfinanzas pueden funcionar mejor para las personas que sobreviven con US$2 o más por día, mientras que las transferencias de efectivo pueden beneficiar más a las que viven en extrema pobreza. Ninguna modalidad es por sí misma una solución para erradicar la pobreza pero pueden producir resultados positivos si se les da un uso combinado.     

Market for 33 percent interest loans: Financial inclusion and microfinance in India

ABSTRACT

Financial inclusion is the process of building viable institutions that provide financial services to those hitherto excluded. These may include savings, insurances, remittances, and credit. Microfinance became the most dominant method for achieving financial inclusion. However, different microfinance schools of thought recommend opposite ways for attaining financial integration. India is a particularly insightful case study due to the sheer number of people excluded from formal financial services, as well as the spectrum of actors and approaches. The aim of this article is threefold. The first aim is to define financial inclusion, depicting its status quo in India and comparing it to its South Asian and Brazil, Russia, India, China, and South Africa (BRICS) peers using recently released data from the Global Findex database. The second aim is to focus on microfinance as the dominant vehicle for achieving financial inclusion by scrutinizing its definitions, contrasting its two leading “schools of thought,” and analyzing the central role of its dominant group-based approach. The third aim of the article will examine why people opt to take micro-credit at 33 percent interest rates.     

Financial services to the poor: the microfinance dilemma in Andhra Pradesh

In India, microfinance and associated strategies of forming self-help groups came about in response to a newly independent nation and its need to include the rural non-banking population into national structures of development and governance. This article examines how the rapid growth of microfinance institutions during the last two decades – especially in the context of the more recent transition from non-profit to for-profit non-banking finance companies (NBFCs) – has led to a significant increase in the delivery of financial services to the rural poor. In Andhra Pradesh, the simultaneous existence of some of India’s most prominent microfinance institutions (MFIs) and their mobilisation of self-help groups – with state backing and linkages to banks leading to relatively easy availability of funds – has led to a tremendous surge in the availability of credit across the state.     

Food security in rural Uganda: assessing latent effects of microfinance on pre-participation

This article assesses the effects of microfinance on food security, using data from a group of Ugandan women from two rural villages: Bulike and Kaliro. Approximately 130 in-person questionnaires were completed over the summer of 2013. Statistical modelling techniques are used to shed light on the variability of access to food and additional income. Specifically, researchers identify latent effects of MFO participation-based literature and test these constructs using survey data collected from women who are about to begin participation in an MFO. Results provide evidence that a structural linkage exists between women’s social capital, empowerment, and collective action and access to additional income.     

Namibia: Consensus institutions and majoritarian politics

This article assesses the utility of Arend Lijphart's classification scheme of democracies by means of a case study of Namibia. In particular, the article examines whether Namibia represents a case of consensus democracy, based on institutional criteria within the power-sharing and power-division dimensions, as developed in Lijphart's Patterns of Democracy (1999). The application of the ten criteria results in a mixed outcome, with an overall modal value of ‘moderately consensus’, a modal value of strongly majoritarian for the executive-parties dimension, and moderately consensus for the federal-executive dimension. The highly varied scores for each of the criteria, particularly within the first of Lijphart's two dimensions, present several problems. It is argued that the statistical modal value represents a distorted image of Namibian politics. Namibia scores consistently on the majoritarian side for criteria which conceptually concern the essence of the consensus modal. Moreover, apparent consensus features such as tripartite institutions, bicameralism, and a rigid constitution do not ‘behave’ as such due to one-party dominance, and neither does proportional representation produce consensus politics. Lijphart's criteria are too formal, and should not receive equal weight. The article concludes that power-sharing is better investigated by focusing on just two criteria, namely the party system and the strongly related criterion of government coalitions. Moreover, it is essential to examine political behaviour, in particular of governing elites, to look for the presence of cooperation and compromise, paradoxically issues which were more prominent in Lijphart's earlier work.     

International institutions and credible commitment of non-democracies

How do non-democratic countries credibly commit to policies in front of domestic and international audiences? Unlike democracies, non-democracies do not have functioning electoral systems and free presses to make their commitments costly thus credible. Yet, the need to credibly commit to a policy arises for non-democracies as well. In particular, when non-democratic leaders push for economic reforms, they need to coordinate the beliefs of domestic groups and attract international resources. How do non-democracies solve the commitment problem and succeed in achieving their policy goals? In this study, we argue that international institutions provide an important mechanism through which non-democratic countries could credibly signal their commitment to open economic policies. We test the argument with the involvement of IMF programs by post-communist countries from 1989 to 2005. We find that while IMF status is used as a credible commitment device for all countries, the effect is more significant for non-democracies.     

Preventing protectionism: International institutions and trade policy

This paper examines the role of international institutions in preventing the rise of protectionism. We analyze states?? choices in trade policy during the current global economic crisis, a situation likely to exacerbate uncertainty in the conduct of commercial relations and to push countries toward ??beggar-thy-neighbor?? trade policies. The main argument of the paper is that the numerous international institutions present in the international system during the current economic crisis serve as conveyors of information and mechanisms of commitment and socialization. They mitigate the uncertainty problem that prevails in prisoner??s dilemma settings such as trade. Economic international organizations increase the flow of information about the preferences and behaviors of its members. Non-economic organizations also have a role to play as social environments that encourage cooperation. Specialized international institutions devoted to trade, such as the WTO and preferential trade agreements (PTAs), not only provide monitoring and enforcement functions but also lock in commitments to liberal trade through legal obligations that make defections costly. We test our argument using a dataset of trade policies during the current economic crisis and of membership in international organizations. The paper finds strong support for the role of international institutions as commitment and socialization mechanisms in preventing the rise of protectionism.     

The democratic legitimation of European institutions

Italy is firmly in the grip of an austerity programme mandated by the European Union institutions, and executed by an unelected technocrat. This state of affairs is at once the result of the acute and unexpected crisis of the financial and economic integration of the eurozone, and an expression of the failures of the Italian political class. Although the euro crisis has been mishandled by European elites, Italy's long-term economic decline, and the inability of Italian party politicians to generate a sustainable coalition to address Italy's economic problems, hinders an exit from the crisis.     

Democracy and innovation: from institutions to agency and leadership

Democracies are, by definition, marked by a strong normative commitment to innovation and change, and all democratic regimes must seek to generate innovations both to keep their fundamental promise and to secure their own survival. In response to the latent crisis of representative democracy, recent political research has devoted eager attention to innovating democratic institutions, yet with conspicuously little regard for the likely effects of such reform proposals on the innovation-related performance and innovation capacity of democratic regimes. Indeed, some reform proposals, if implemented, would appear to reduce rather than increase the innovation capacity of representative democracies. Innovation-focused leadership may be able to fill that gap and provide what even the best institutions alone are unable to accomplish. In contrast to recent research on leadership and innovation in the public sector, which tends to centre on forms of collaborative leadership within networks, this article emphasizes the importance of individual leaders, and more specifically of political chief executives whose status and position in the governance process have been significantly enhanced by a combination of different factors. However, while leadership might be the key to democratic political innovation, innovative leadership and institutional engineering remain closely related to one another.