Loan Officers’ Gender and Microfinance Repayment Rates

This study examines the impact of loan officer characteristics on repayment rates of microfinance borrowers in Mexico applying multilevel analyses, with special attention to the impact of the gender of the loan officer on default rates. The results strongly suggest that loan officers play a crucial role in improving repayment rates in microfinance and that male loan officers are better able to induce borrowers to repay than female loan officers. This may be because men exert authority over women and face fewer problems working late, travelling through unsafe places, and combining a position as counsellor with enforcing repayment.     

The real economic costs of granting foreign aid

Scholars interested in assessing the comparative economic burdens assumed by advanced nations in their loans and grants to the L.D.C.s have pointed out that adjustments are necessary for many factors such as rate of interest charged (if any), time pattern of repayment (if any), whether or not interest and repayment is in hard or soft currency or in kind, rate of return on capital invested at home, and so forth. Clearly, a loan or grant is more burdensome to the donor, if, for example: the interest charged is low, the rate of return at home is high, and repayment is in soft currency or in kind and extended over a long period of time.

In this paper, an additional important adjustment is suggested. It is argued that a grant or loan involves a social cost to the donor only if the donor is deprived thereby of the use of current output for domestic purposes. To the extent that aid is provided by (i.e. results in) the employment of otherwise unemployed labour and other primary factors, it may be viewed as socially costless to the advanced nation. In fact, by eliminating further unemployment via the multiplier, the granting of aid may (with a lag) leave the donor with more output available for home use than before. This type of analysis would not apply to western nations at or close to full employment, or to the usually fully employed centrally planned economies, since the granting of aid in these instances necessarily reduces the amount of output available for home use. For this reason, the granting of aid generally represents more of a sacrifice to centrally planned than to market economies. This is illustrated by estimates.

Loan repayment must also be evaluated in terms of its employment effects. Analysis shows that the employment effects of loan repayment is likely to be quite asymmetrical to that of disbursement.     

The effect of green taxes and carbon tax shifting on the state of Minnesota

Although it is well established that taxes have a distortionary and negative effect on the economy, not all taxes are equally deleterious. This study examines the effect of a revenue neutral tax on Carbon Emissions, using the Energy 2020 and REMI models. The revenue raised by the carbon tax is off-set by corresponding reductions in other taxes (property and payroll taxes). The results indicate that the carbon emissions tax may or may not be as negative to economic growth as the taxes that they replace were. Therefore, it is possible to tax pollution, and only minorly slow or even stimulate the economy     

U.S. treasury department studies of federal- state-local fiscal relations: the context,the major themes,and the outcome

This article provides an assessment of the condition of the literature on several major issues of Federal-State-local fiscal relations. The assessment is provided in the context of a three-volume report on Federal-State-local fiscal relations recently published by the U.S. Treasury Department. The author was a major participant in the studies who generally views them favorably, but who also raises his real concerns about a number of matters.

This article summarizes and evaluates certain aspects of the economic theory of federalism, the intellectual underpinnings of the report. This article addresses the institutional context in which the report was written, which helped shape its approach, content, and conclusions. The report itself generally lacks detailed recom-mendations.

Three main themes of the report are addressed in detail in this article. These are: (a) issues relevant to programs of general-purpose fiscal assistance, which include the adequacy of any potential improvements that might be made in measures of the fiscal capacity of State and local governments; (b) the role, if any, for tax subsidies to State and local governments through the deductibility of State and local taxes in the computation of individual Federal income taxes, and the exemption from Federal income taxes of interest paid on bonds and notes issued by State and local governments; and (c) the projection of the long-term outlook for the fiscal condition of the State-local sector on a current services basis, compared with projections of the long term outlook for the Federal government.     

Globalisation and Developing Countries – a Shrinking Tax Base?

This paper evaluates the impact of globalisation on tax bases of countries at varying stages of development. We see globalisation as a process that induces countries to embrace greater trade and financial integration. This in turn should shift their tax revenue from ‘easy to collect’ taxes (tariffs and seigniorage) towards ‘hard to collect’ taxes (value added and income taxes). We find that trade and financial openness have a positive association with the ‘hard to collect’ taxes, and a negative association with the easy to collect taxes.     

An Impulse Response Function for Corporate Taxes in Barbados

For many years, corporate taxes have been an important source of Government revenue in Barbados. The variables, namely, rate of corporate tax, real income and the rate of interest were selected when applying an impulse response function to the model for corporate taxes. The function revealed the following results after respective new equilibria were attained: First, corporate taxes would contract if the rate of corporate tax had experienced an upward shock. Second, corporate tax inflows would rise sharply from an upward shock to real income. Finally, an upward shock to the rate of interest would result in a steep contraction in corporate taxes.     

External Social Ties and Loan Repayment of Group Lending Members: A Case Study of Pro Mujer Mexico

We investigate how external social ties, that is, social ties with individuals outside the borrowing group, determine loan repayments of individual borrowers in joint liability group lending. We measure the resources in external ties in terms of the informal risk insurance arrangement they embed. The ties borrowers have with individuals outside the group and the informal risk insurance arrangement they represent, help to survive in general, and repay their loans in particular. The risk of losing these ties increases the willingness to repay loans, that is, these ties can be regarded as a form of collateral to stimulate loan repayment. The extent to which these external ties are effectively pledged as collateral depends on the extent to which social networks of group members are overlapping: the more borrowers’ networks of external ties overlap (referred to as information channels), the higher the risk of losing the informal risk insurance arrangement in case of non-repayment. We use data from 802 mapped social networks of borrowers’ internal and external ties from a microfinance institution in Mexico. We find that group borrowers with external ties, representing a strong informal risk insurance arrangement while at the same time being information channels, have lower repayment problems     

The Impact of Institutional and Land Use Change on Local Incomes in Chilean Patagonia

Microfinances in Bangladesh introduced a contingent repayment system beginning in 2002, which allowed rescheduling of savings and installments during natural disasters for affected members. This paper is one of the first attempts to evaluate the system employing a unique dataset. In using evidence from a flood in 2004, the author found that rescheduling plays the role of a safety net by decreasing the probability that people skip meals during negative shocks by 5.1 per cent. This effect is even higher on the landless and females. This study attempts to contribute to the issue regarding the poverty reduction effect of microfinances.     

Debt arrears in Latin America: Do political variables matter?

Political instability and debt problems characterise Latin America in the last two decades. This article estimated a logit model of debt arrears including economic as well as political variables. Our results suggested that both economic and political indicators affected debt repayment in Latin America during 1971–86. We also cast a shadow on the viewpoint that authoritarian and military regimes have an advantage over democratically elected governments with regard to debt related issues.     

Development impact fees: Modeling future growth and economic development in a south Carolina community

User fees are an attractive alternative to general taxes, especially property taxes, insofar as they are stable and appropriate. The development impact fee is sometimes used in growing communities, and can relieve the service cost burden of new development to existing residents in the short term. Their proper use demands forecasting development trends, population growth and economic conditions. The city of Mount Pleasant, South Carolina - a suburb of Charleston - has used simple models to assess impact fees for the past seven years. This paper will describe the models used to determine impact fees and also describe a more filly developed revenue model used to predict future growth of impact fees as one category of local revenue.     

The performance of Illinois' unemployment insurance system over business cycles

The back-to-back recessions of the early 1980's drove Illinois and most other states deep into debt to the Federal government for their unemployment insurance systems. As part of the process of debt repayment, Illinois created a model of the state's unemployment insurance (UI) system to analyze legislation geared to debt repayment. This paper describes Illinois' UI forecasting model, and examines two uses of the model for UI system evaluation. Illinois' system is found to be solvent, as it accumulates little or no debt over severe business cycles and repays debt automatically. It is also found to be counter-cyclical, as benefits increase during recessions, and tax rates tend to increase at times of low unemployment.     

Managing Tax Regimes: A Call for Research

Most academic research on taxation relates to higher-level issues of fiscal policy. Much public debate takes place about the calculation and incidence of different taxes, but little academic research addresses the management problems that are specific to national taxation regimes. This paper identifies emerging issues and calls for joint practitioner/academic attention on an international basis to address these issues.     

Aid for the poorest: Some early lessons of UK experience

The paper presents an interim review of recent attempts to reach the poorest people in developing countries through aid policy from the viewpoint of one donor, the United Kingdom. It concludes that the UK has achieved a modest increase in the proportion of aid aimed at the poorest between 1974 and 1979; that poverty‐focused projects are in general more local‐cost intensive, and have lower rates of return, than others; and that the principal difficulties in the way of successful implementation of poverty‐focused projects are: excessive size, an over‐rapid rate of disbursement, inadequate local cost provisions and failure to specify the target group or the repayment strategy with sufficient precision. It is argued that there are political obstacles to removing the second and third of these obstacles in donor countries, and to removing the fourth in recipient countries also.     

The ‘Impossible’ Default: Qualitative Data on Borrower Responses to Two Types of Social-Collateral Microfinance Structures in Rural China

Qualitative data reveal how the social context underlying the ties linking borrowers in microfinance programmes influences their decisions. Focusing directly on social context makes it possible to distinguish between two social-collateral structures and explain why one facilitated repayment while the other did not. Fieldwork in rural China shows that the basis of the social ties in the social-collateral structure is central to explaining whether and why individuals decided to sanction defaulters and repay loans. The article closes with reflections on generalisations of these findings to future microfinance research.     

How bad is the federal budget deficit?

This paper describes two views on the economic effects of government budget deficits. According to the traditional view, deficits have a variety of adverse economic consequences. In particular, they cause domestic residents to save less and eventually to have a lower standard of living than would have occurred if the same level of government spending had been financed entirely with current taxes. A competing view, known as the Ricardian view, holds that the economy is little affected by whether a given level of government spending is financed entirely by current taxes or by some feasible combination of taxes and borrowing. Most of the empirical research on the economic consequences of deficits has failed to isolate the effects predicted by the traditional view. The paper also discusses why the conventional methods of measuring the government budget deficit are not the most economically meaningful ones.     

Need money? roll the dice

In 1990, the Mississippi Legislature legalized dockside casino gaming as a surrogate tax system for the state. Since the establishment of the first casino in 1992, the casino industry has become an important component in the state's revenue picture. During fiscal years 1993, 1994, and 1995, gaming taxes and fees accounted for 1.6, 4.1, and 5.04 percent of Mississippi's general fund revenue, respectively. In addition, certain localities have benefitted from the industry as well. Beyond the direct revenue received through local taxation, casino gaming has substantially increased both property tax revenue and sales tax collections. The Mississippi Gaming Commission believes, however, that long-term revenue stability depends on developing resort destinations as opposed to a continued reliance on day-trippers.

Colonists who balked at paying taxes to local governments were willing to purchase lottery tickets by those same governments⁽¹⁾ (yesterday).

Government no longer possesses the capacity to secure the cooperation of the citizenry in meeting the requirements of public need. Consequently, it uses a buffer to take resources from the citizenry without invoking their wrath⁽²⁾ (today).     

Socioeconomic impacts of the proposed federal gaming tax

We review the history of gaming and its taxation in the U.S., particularly in regard to the idea of “sin taxes” which were often presented as policy instruments intended to control problem gamblers. The review suggests that raising taxes neither encourages moderation nor replaces negative external costs. We follow the review with a socioeconomic impact analysis of a proposed four percent Federal Gaming Tax by simulating its impact on Clark County, Nevada for the period 1995-2004 using a large scale econometric multi-regional model. Clark County is of interest because it is where Las Vegas is located. The analysis reveals that the proposed tax would lead to a measurable decline in Clark County's jobs, population, disposable income, and total industrial during the forecast period. By 2004, total industrial output would be 1.3 percent lower under the proposed tax and Clark County would experience a loss of $1.39 in real disposable income for every gaming tax dollar collected by Federal Government. These reductions, coupled particularly with the loss of thousands of jobs in Las Vegas area hotels/casinos predicted by the analysis suggest that increased demands on social services in Clark County would result. These findings, together with the lack of evidence that raising taxes would promote moderation or reduce external negative costs, lead us to argue that excise taxes represent an unattractive option.     

Local Fiscal Stress in Sub‐Saharan Africa: The Kenyan Example

Abstract

This article identifies the fiscal weaknesses of local government in Africa, with concentration of the fiscal stress that is endemic to their condition. It then examines Kenya, as a case study in sub‐Saharan Africa. It continues to focus down on three Kenyan cities—Nairobi, Mombasa, and Kisumu, and identifies their six major revenue sources: land based revenues, regulatory revenues, income‐based taxes, service revenues, user charges, and government grants. Although some of the data is problematic, it is possible to determine several reasons for local fiscal stress. These reasons include limited access to stable financial resources, unstable national economic performance, centralized governmental control, mixed results of decentralization, and institutional and managerial weaknesses, including corruption in the collection and use of resources. Four recommendations are advanced to help these local governments: the development of local credit systems, the use of non‐governmental organizations, the clarification of the use of foreign aid, and the development of a greater capacity for governance. This articles main theoretical contribution is the development of an analytic framework for examining the reasons for fiscal stress in sub‐Saharan Africa. By examining revenue and expenditure patterns of the three localities, the article develops a data set that highlights some of the reasons for local government financial problems—the governments do not know how much revenue can be collected from a particular revenue source, they do not have records of existing sources of revenue, and they only collect about 40–60% of their estimated collections.     

Can crop insurance work? The case of India

This article assesses the performance of the Indian Comprehensive Crop Insurance Scheme from 1985 to 1993 in relation to a recent critical literature which argues that comprehensive agricultural insurance is subject to insuperable moral‐hazard obstacles. The Indian scheme has made heavy financial losses; on the benefit side, sample data from Andhra Pradesh suggest that some farmers have converted to yield‐raising techniques as a result of the presence of the insurance scheme, but that the scheme has not brought about any improvement in loan repayment performance, even though that was the scheme's explicit objective. We conclude that, to work properly, the scheme requires an increase in premiums and a reduction in the range of risks covered. A possible alternative design, in which individual farmers are insured directly against drought rather than against a shortfall in yields, is sketched out.     

Urban unemployment and optimal tax policy in a small,open dual economy

This paper analyses optimal tax policies in a two‐sector model of an LDC, similar to that of Harris and Todaro [1970]. The analysis assumes a small, open economy with a non‐competitive urban wage which depends on prices of both agricultural and manufactured goods. Optimal policies are considered for cases where an employment subsidy in manufacturing and/or taxes on international trade are the only feasible instruments, and where government revenue has an excess burden. Comparisons are made with results obtained by Harris and Todaro, Hagen, and Bhagwati and Srinivasan, for similar models.