Microfinance and Female Empowerment

In the informal economy of developing countries, female entrepreneurs face a comparative disadvantage for operating high-productivity activities, owing to the prevalence of patriarchal forms of business regulations. Yet, for microfinance institutions (MFIs) to succeed in enhancing female empowerment, increased access to credit must enable female entrepreneurs to tap into the range of high-productivity activities. So when the costs of legality are too high in developing countries, and the informal economy becomes the only affordable venue for operating a business venture, this paper shows that access to microfinancee services becomes only necessary, but not sufficient for female empowerment. Based upon a game-theoretic model of activity choices by ex ante homogeneous women, we argue that conditioning well-trained women's access to credit to the adoption of high-productivity activities may enable MFIs to induce the emergence of networks of female entrepreneurs large enough to mitigate patriarchal practices that raise the costs of operating such activities in the informal economy.Microfinance, female entrepreneurship, supermodular games

Who is credit constrained among denied or discouraged borrowers?".

Since the seminal work of Jappelli (1990), it has become standard to identify as liquidity-constrained, borrowers who were either turned down for credit or did not apply because they might be turned down. In this paper, we show that the so-called “denied or discouraged†proxy does not capture accurately consumers’ credit access when consumers seek credit to finance expenditure on durable goods. Our sample is drawn from the Panel Study of Income Dynamics. We document systematic misclassification of unconstrained households as constrained. We argue that: for durables, this proxy captures best the intensity put forth by the borrower when shopping for a loan.Borrowing constraints; Mortgage loans; Consumer search

Are Foster Children Made Better Off by Informal Fostering Arrangements?

Research on the effects of informal child fostering arrangements on the welfare of the children involved highlights cross-country disparities. Why may there be differences across countries with regard to the effects of informal child fostering arrangements? If in all countries reporting a high incidence of foster children Hamilton’s rule applies, then these cross-country differences are puzzling. Our model of child fostering arrangements builds on the fact that a child’s school performance is jointly influenced by his nutrition status and the time he has available at home to develop his learning skills and prepare for national school tests. Given this feature of academic performance, fostering out may become a poor parent’s best option for enhancing his child’s academic excellence, by trading off study time for better nutrition. We show that child fostering arrangements embedding this human capital motive for out-fostering make the foster child better off when nutrition is paramount to a child’s ability to achieve academic excellence.Child fostering, child nutrition, foster child's welfare

Understanding the Persistent Low Performance of African Agriculture

We explain the persistence of low performances in African agriculture by analyzing the determinants of farmers' decisions to modernize their farming practices. Owing to sociocultural factors specific to Sub-Saharan Africa, farmers' decisions on farming practices are strategic complements. We demonstrate that the modernization game these farmers play admits two pure-strategy, Pareto-ranked, symmetric Nash-equilibria. The equilibrium where all farmers choose to modernize their farming methods is preferred to the one where all of them choose to stick to a traditional method. We argue that scarcity and economic opportunities put forward by neo-Boserupian theories of induced-innovation as determinants of the onset agricultural innovations are, in the context of African countries, only necessary, but not sufficient to generate modernization of farming methods. Deliberate action to enhance aadoption of agricultural innovations must therefore take the African's sociocultural context into consideration, or risk failure.Sub-Saharan Africa, Agricultural modernization, Fertilizer adoption, Supermodular games

Understanding economic decision-making under social norms prescribing behaviours

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