Econometric analyses of microfinance credit group formation, contractual risks and welfare impacts in Northern Ethiopia

Key words Microfinance, joint liability, contractual risk, group formation, risk-matching, impact evaluation, Panel data econometrics, dynamic panel probit, trend models, fixed-effects, composite counterfactuals, propensity score matching, farm households, Ethiopia. Lack of access to credit is a key obstacle for economic development in poor countries. The underlying problem is related to information asymmetry combined with the poor’s lack of collateral to pledge. New mechanisms in microfinance offer ways to deal with this problem without resorting to collateral requirements. The objective of this thesis is to examine the mechanisms of providing credit through microfinance and assess the long-run borrowing effects on household welfare in Ethiopia. The Ethiopian environment provides a suitable setting to examine these issues. To meet this objective, two unique data sets - a five-wave panel data on 400 and a cross-sectional data on 201 households - from northern Ethiopia are used. Borrowing decision is first conceptualized using a dynamic stochastic theoretical framework. Two types of risks involved in joint liability lending are incorporated, i.e., risk of partner failure and risk of losing future access to credit. Empirical analysis using recent dynamic panel data probit techniques show that these contractual risks indeed impede participation in borrowing. The impediment is higher for the poorer, and for new than repeat participants. Second, group formation is analyzed within the framework of alternative microeconomic theories of joint liability where the commonly held hypothesis that groups formed are homogeneous in risk profiles is tested. Empirical results reject this hypothesis indicating that the formation of heterogeneous risk profiles is an inherent feature in group formation and repayment. In fact, there is evidence that borrowers take advantage of established informal credit and saving, and other social networks, which also suggests that group formation outcomes vary depending on underlying socioeconomic contexts. Third, the impact of long-term borrowing on household welfare is assessed from the dimension of intensity and timing of participation in borrowing. Panel data covering relatively long period enabled to account for duration and timing concerns in program evaluation. Recent parametric and semi-parametric panel data techniques are innovatively employed to mitigate participation selection biases. Results from both approaches indicate that borrowing has increased household welfare significantly: the earlier and more frequent the participation the higher the impact partly due to lasting effects of credit. This also suggests that impact studies that are based on a single-shot observation of outcomes and that do not account for the timing and duration of participation may underestimate microfinance credit impacts. </p

Randomized Control Trials in the Field of Development

In October 2019, Abhijit Banerjee, Esther Duflo, and Michael Kremer jointly won the 51st Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel "for their experimental approach to alleviating global poverty." But what is the exact scope of their experimental method, known as randomized control trials (RCTs)? Which sorts of questions are RCTs able to address and which do they fail to answer? This book provides answers to these questions, explaining how RCTs work, what they can achieve, why they sometimes fail, how they can be improved and why other methods are both useful and necessary. Chapters contributed by leading specialists in the field present a full and coherent picture of the main strengths and weaknesses of RCTs in the field of development. Looking beyond the epistemological, political, and ethical differences underlying many of the disagreements surrounding RCTs, it explores the implementation of RCTs on the ground, outside of their ideal theoretical conditions and reveals some unsuspected uses and effects, their disruptive potential, but also their political uses. The contributions uncover the implicit worldview that many RCTs draw on and disseminate, and probe the gap between the method's narrow scope and its success, while also proposing improvements and alternatives. This book warns against the potential dangers of their excessive use, arguing that the best use for RCTs is not necessarily that which immediately springs to mind, and offering opportunity to come to an informed and reasoned judgement on RCTs and what they can bring to development

Randomized Control Trials in the Field of Development

In October 2019, Abhijit Banerjee, Esther Duflo, and Michael Kremer jointly won the 51st Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel "for their experimental approach to alleviating global poverty." But what is the exact scope of their experimental method, known as randomized control trials (RCTs)? Which sorts of questions are RCTs able to address and which do they fail to answer? This book provides answers to these questions, explaining how RCTs work, what they can achieve, why they sometimes fail, how they can be improved and why other methods are both useful and necessary. Chapters contributed by leading specialists in the field present a full and coherent picture of the main strengths and weaknesses of RCTs in the field of development. Looking beyond the epistemological, political, and ethical differences underlying many of the disagreements surrounding RCTs, it explores the implementation of RCTs on the ground, outside of their ideal theoretical conditions and reveals some unsuspected uses and effects, their disruptive potential, but also their political uses. The contributions uncover the implicit worldview that many RCTs draw on and disseminate, and probe the gap between the method's narrow scope and its success, while also proposing improvements and alternatives. This book warns against the potential dangers of their excessive use, arguing that the best use for RCTs is not necessarily that which immediately springs to mind, and offering opportunity to come to an informed and reasoned judgement on RCTs and what they can bring to development

Essays on microfinance and poverty dynamics

Microfinance celebrates 40 years of existence with an ever wider popularity in the community of development practitioners. It is one of the cornerstones of the newly designed Sustainable Development Goals. But popularity does not mean success. To this day, the actual empirical evidence on the welfare impacts of microfinance programs are mixed. Using panel data from Bangladesh, this thesis seeks to address three major gaps in the literature.Impact evaluation studies typically focus on mean population outcomes. Chapter 2 makes use of quantile regression techniques in order to investigate potential distributional impacts of microfinance programs. There is compelling evidence that if microfinance benefits borrowers, the impacts are not the same for everyone. Such impact heterogeneity can have important welfare consequences.Chapter 3 investigates whether spillover effects from microfinance programs exist, which could benefit the community as a whole on top of direct beneficiaries. Afterproviding a new set of direct impact estimates that corroborate previous findings, estimations suggest there are potentially consumption gains to non-borrowers who live in villages where microfinance is accessible. A linear social interactions model succeeds in characterising spillover effects on consumption and on boys schooling as stemming from peer endogenous effects.Chapter 4 looks into the benefits of microfinance in helping the poor deal with vulnerability, another dimension of welfare that relates to the ability to insure against risks. A measure of vulnerability as expected poverty is constructed from cross-sections of data directly. After seven years went by between the surveys borrowers, who were by far worse off than non borrowers in their ability to face idiosyncratic shocks, do at least as well as non-borrowers. Empirical evidence suggests that households who borrowed are less likely to be considered as vulnerable

LE REGIONI D'EUROPA TRA IDENTITÀ LOCALI, NUOVE COMUNITÀ E DISPARITÀ TERRITORIALI

L’Europa è oggi attraversata da una forte domanda di autonomia da parte dei territori: da un lato, a tutela dell’identità delle comunità locali e, dall’altro, per la crescente rivendicazione di una più ampia rappresentanza delle cittadinanze. Queste istanze possono, però, mettere a rischio gli obiettivi di equilibrio e di coesione economica, sociale e territoriale, da sempre al centro della riflessione e delle proposte sviluppate dagli studiosi delle scienze regionali. La recente crisi ha acuito l’instabilità e allargato i complessivi divari tra le regioni, anche nella loro dinamica interna di evoluzione. Alla resilienza economica non sempre è corrisposto, nell’attuale transizione verso un nuovo paradigma, il mantenimento di solidi livelli di coesione sociale e di integrazione tra aree e comunità. Il volume raccoglie una selezione di contributi presentati alla XXXIX Conferenza Italiana di Scienze Regionali, svoltasi a Bolzano il 17, 18 e 19 settembre 2018. Nella sua articolazione, esso si sviluppa in tre parti. La prima analizza il tema della domanda di autonomia da parte dei territori all’interno dello sviluppo economico e sociale di regioni e paesi, e dell’attuale dibattito sul federalismo differenziato. Nella seconda le riflessioni si estendono alla crescente disparità tra aree centrali e aree periferiche, tra aree interne e aree esposte, tra Nord e Sud dei Paesi e dell’Europa, mentre nella terza parte, l’analisi guarda ai mutevoli equilibri tra territori e sistemi locali urbani e rurali, tra pianura e montagna e, all’interno delle aree montane, tra i fondivalle maggiormente urbanizzati e i territori di alta quota, zone spesso di confine tra province, regioni e stati. La novità editoriale di quest’anno è rappresentata da uno spazio dedicato a brevi contributi a cura di giovani autori vincitori dei premi AISRe.Europe is today crossed by a strong demand for autonomy from the territories: to protect the identity of local communities and, also analyze the growing demand for a broader representation of citizens. However, these issues can jeopardize the objectives of balance and economic, social and territorial cohesion, which have always been at the center of the reflection and proposals developed by scholars of regional sciences. The recent crisis has worsened instability and widened the overall gaps between the regions, including in their internal dynamics of evolution. Economic resilience is not always matched, in the current transition towards a new paradigm, by maintaining solid levels of social cohesion and integration between areas and communities. The volume collects a selection of contributions presented at the XXXIX Italian Conference of Regional Science, held in Bolzano on 17, 18 and 19 September 2018. The volume is divided into three parts. The first analyzes the issue of the demand for autonomy by the territories within the economic and social development of regions and countries, and the current debate on differentiated federalism. In the second, the reflections extend to the growing disparity between central and peripheral areas, between internal and exposed areas, between North and South of countries and Europe, while in the third part, the analysis looks at the changing balance between territories and systems. urban and rural areas, between plains and mountains and, within mountain areas, between the most urbanized valleys and high altitude territories, areas often bordering provinces, regions and states. This year ia space is dedicated to short contributions by young authors who have won the AISRe Awards

New Developments in Renewable Energy

Renewable energy is defined as the energy which naturally occurs, covers a number of sources and technologies at different stages, and is theoretically inexhaustible. Renewable energy sources such as those who are generated from sun or wind are the most readily-available and possible solutions to address the challenge of growing energy demands in the world. Newer and environmentally friendly technologies are able to provide different social and environmental benefits such as employment and decent environment. Renewable energy technologies are crucial contributors to world energy security, reduce reliance on fossil fuels, and provide opportunities for mitigating greenhouse gases. International public opinion indicates that there is strong support for a variety of methods for solving energy supply problems, one of which is utilizing renewable energy sources. In recent years, countries realized that that the renewable energy and its sector are key components for greener economies

The drivers of Corporate Social Responsibility in the supply chain. A case study.

Purpose: The paper studies the way in which a SME integrates CSR into its corporate strategy, the practices it puts in place and how its CSR strategies reflect on its suppliers and customers relations. Methodology/Research limitations: A qualitative case study methodology is used. The use of a single case study limits the generalizing capacity of these findings. Findings: The entrepreneur’s ethical beliefs and value system play a fundamental role in shaping sustainable corporate strategy. Furthermore, the type of competitive strategy selected based on innovation, quality and responsibility clearly emerges both in terms of well defined management procedures and supply chain relations as a whole aimed at involving partners in the process of sustainable innovation. Originality/value: The paper presents a SME that has devised an original innovative business model. The study pivots on the issues of innovation and eco-sustainability in a context of drivers for CRS and business ethics. These values are considered fundamental at International level; the United Nations has declared 2011 the “International Year of Forestry”

Proceedings of the 19th European Roundtable for Sustainable Consumption and Production Circular Europe for Sustainability: Design, Production and Consumption

Postprint (published version