Dominican Republic: Analysis of the Clients of FondoMicro

This report provides a preliminary quantitative analysis of the financial results of five organizations which are clients of FondoMicro. It also includes a qualitative assessment of the long-run vision held by these institutions' managers and of the organizations' ability to allow a transformation into self-sustainable institutions, whose financial contracts are useful to small and micro entrepreneurs.O54 H43

Linking poverty, natural resources, and financial markets: a model of land use by rural households in El Salvador

This paper posits that deforestation and poverty levels are related through an inverted-U shape --the environmental Kuznets-- curve and that access to credit shifts this curve downwards, thus positively impacting natural resource uses. This hypothesis is tested using a household panel data set from El Salvador.Land Economics/Use,

A COMPARISON OF OPTION-THEORETIC AND CHOICE-THEORETIC APPROACHES TO EVALUATING ALTERNATIVE FINANCIAL TECHNOLOGIES FOR MORTGAGE LOANS TO LOW-INCOME HOUSEHOLDS

This paper evaluates the efficacy of two alternative lending technologies - the traditional banking technology and a cash flow based counseling program - by using competing risks (option-based) and choice theoretic approaches. We find evidence to support the notion that low-income borrowers have some degree of financial sophistication, as they prepay the mortgage loan by considering the current value of the call option. The evidence also suggests that borrower heterogeneity and insolvency affect mortgage termination.credit counseling, competing risks, low-income mortgage loans., Financial Economics, Q140 (Agricultural Finance), Q140,

Foreign Assistance and Domestic Financial Markets in Developing Countries

A.E. Res. 89-2

THE INFLUENCE OF MICROFINANCE ON THE EDUCATION DECISIONS OF RURAL HOUSEHOLDS: EVIDENCE FROM BOLIVIA

There is debate about measurement of impact and achievement of expected results of rural microfinance programs in LDCs. The paper addresses these issues using survey household data from Bolivia. Regression models examine the determinants of education outcomes for microfinance clients. The results challenge usual assumptions in program design.Teaching/Communication/Extension/Profession,

A DYNAMIC MODEL OF MICROLENDING IN THE DEVELOPING COUNTRIES

In this paper, we examine the contract design problem of banks that extend loans to poor borrowers and seek to maximize outreach while remaining financially sustainable. A dynamic model is developed that shows how interest rates can be determined based on information about productivity and diligence characteristics of borrowers, investment opportunities, correlation of business activities, peer monitoring costs, and social sanctions. The results indicate that relative to the traditional static models, the dynamic model explains better the current experience in individual and group lending in developing countries.Financial Economics,

Gene expression rearrangements denoting changes in the biological state

In many situations, the gene expression signature is a unique marker of the biological state. We study the modification of the gene expression distribution function when the biological state of a system experiences a change. This change may be the result of a selective pressure, as in the Long Term Evolution Experiment with E. Coli populations, or the progression to Alzheimer disease in aged brains, or the progression from a normal tissue to the cancer state. The first two cases seem to belong to a class of transitions, where the initial and final states are relatively close to each other, and the distribution function for the differential expressions is short ranged, with a tail of only a few dozens of strongly varying genes. In the latter case, cancer, the initial and final states are far apart and separated by a low-fitness barrier. The distribution function shows a very heavy tail, with thousands of silenced and over-expressed genes. We characterize the biological states by means of their principal component representations, and the expression distribution functions by their maximal and minimal differential expression values and the exponents of the Pareto laws describing the tails