THE COST STRUCTURE OF MICROFINANCE INSTITUTIONS IN EASTERN EUROPE AND CENTRAL ASIA

Microfinance institutions are important, particularly in developing countries, because they expand the frontier of financial intermediation by providing loans to those traditionally excluded from formal financial markets. This paper presents the first systematic statistical examination of the performance of MFIs operating in Eastern Europe and Central Asia. A cost function is estimated for MFIs in the region from 1999-2004. First, the presence of subsidies is found to be associated with higher MFI costs. When output is measured as the number of loans made, we find that MFIs become more efficient over time and that MFIs involved in the provision of group loans and loans to women have lower costs. However, when output is measured as volume of loans rather than their number, this last finding is reversed. This may be due to the fact that such loans are smaller in size; thus for a given volume more loans must be made.http://deepblue.lib.umich.edu/bitstream/2027.42/40195/3/wp809.pd

The Threat of Capital Drain: A Rationale for Public Banks?

This paper yields a rationale for why subsidized public banks may be desirable from a regional perspective in a financially integrated economy. We present a model with credit rationing and heterogeneous regions in which public banks prevent a capital drain from poorer to richer regions by subsidizing local depositors, for example, through a public guarantee. Under some conditions, cooperative banks can perform the same function without any subsidization; however, they may be crowded out by public banks. We also discuss the impact of the political structure on the emergence of public banks in a political-economy setting and the role of interregional mobility

Using derivative logic to speculate on the future of the social investment market

This article pries open the black box of the social impact bond (SIB), the novel financial instrument at the heart of social investment. We discover that concrete information is currently limited and our method is thus more speculative. We address the obfuscation of the nomenclature of the instrument and explore the mechanics of SIBs to suggest that they are not simple bonds but rather also bear properties akin to those associated with derivative contracts. We speculate on possible developments of the market in these bonds by considering the history of some previous financial innovations, namely, collateralized debt obligations (CDOs) underpinned by microfinance loans and the short-lived policy analysis market. Our discussion leads us to reevaluate Goodhart’s law and the ways in which it operates in relation to SIBs. We conclude by suggesting that SIBs' inherent indifference to the underlying state of the world renders them ultimately unlikely to delivery improvements in public services

Gender, microcredit, and poverty alleviation in a developing country: the case of women entrepreneurs in Pakistan

The paper explores the impact of financial exclusion on financial and human poverty amongst women in Pakistan. The findings suggest that persistent financial exclusion, gender discrimination, and conservative religious values adversely impact women’s empowerment. There is an inverse correlation between the size of microcredit and women’s financial poverty, which is not the case for human poverty. Larger families experienced higher rates of poverty reduction than smaller families. The study offers evidence, and supports theories on the impact of microcredit upon poverty alleviation. These findings inform policy makers, women entrepreneurs, and microfinance institutions

Peer grouping in an adverse selection model

SIGLEAvailable from British Library Document Supply Centre-DSC:3597.7738(UCL-DE-DP--96-24) / BLDSC - British Library Document Supply CentreGBUnited Kingdo

Peer grouping in an adverse selection model

SIGLEAvailable from British Library Document Supply Centre-DSC:3597.7738(UCL-DE-DP--96-24) / BLDSC - British Library Document Supply CentreGBUnited Kingdo