Poverty, Human Development and Financial Services

human development, poverty, empowerment

Networks of micro and small enterprise banks : a contribution to financial sector development : [Version March 2005]

The paper is a follow-up to an article published in Technique Financière et Developpement in 2000 (see the appendix to the hardcopy version), which portrayed the first results of a new strategy in the field of development finance implemented in South-East Europe. This strategy consists in creating microfinance banks as greenfield investments, that is, of building up new banks which specialise in providing credit and other financial services to micro and small enterprises, instead of transforming existing credit-granting NGOs into formal banks, which had been the dominant approach in the 1990s. The present paper shows that this strategy has, in the course of the last five years, led to the emergence of a network of microfinance banks operating in several parts of the world. After discussing why financial sector development is a crucial determinant of general social and economic development and contrasting the new strategy to former approaches in the area of development finance, the paper provides information about the shareholder composition and the investment portfolio of what is at present the world's largest and most successful network of microfinance banks. This network is a good example of a well-functioning "private public partnership". The paper then provides performance figures and discusses why the creation of such a network seems to be a particularly promising approach to the creation of financially self-sustaining financial institutions with a clear developmental objective

Zero Returns to Compulsory Schooling in Germany: Evidence and Interpretation

Education, Schooling

Networks of micro and small enterprise banks : a contribution to financial sector development :[Version January 2004]

The paper is a follow-up to an article published in Technique Financière et Developpement in 2000 (see the appendix to the hardcopy version), which portrayed the first results of a new strategy in the field of development finance implemented in South-East Europe. This strategy consists in creating microfinance banks as greenfield investments, that is, of building up new banks which specialise in providing credit and other financial services to micro and small enterprises, instead of transforming existing credit-granting NGOs into formal banks, which had been the dominant approach in the 1990s. The present paper shows that this strategy has, in the course of the last five years, led to the emergence of a network of microfinance banks operating in several parts of the world. After discussing why financial sector development is a crucial determinant of general social and economic development and contrasting the new strategy to former approaches in the area of development finance, the paper provides information about the shareholder composition and the investment portfolio of what is at present the world's largest and most successful network of microfinance banks. This network is a good example of a well-functioning "private public partnership". The paper then provides performance figures and discusses why the creation of such a network seems to be a particularly promising approach to the creation of financially self-sustaining financial institutions with a clear developmental objective

Zero Returns to Compulsory Schooling In Germany: Evidence and Interpretation

We estimate the impact of compulsory schooling on earnings using the changes in compulsory schooling laws for secondary schools in West German states during the period from 1948 to 1970. While our research design is very similar to studies for various other countries, we find very different estimates of the returns. Most estimates in the literature indicate returns in the range of 10 to 15 percent. We find no return to compulsory schooling in Germany in terms of higher wages. We investigate whether this is due to labor market institutions or the existence of the apprenticeship training system in Germany, but find no evidence for these explanations. We conjecture that the result might be due to the fact that the basic skills most relevant for the labor market are learned earlier in Germany than in other countries.

A critical survey of approaches to the role of credit in smallholder development

Recent literature on farm credit in the context of rural development displays an exciting variety of conflicting opinions. The argument that farm credit i3 essential to smallholder development is often couched in terms of the "need" for credit, a concept which is frequently undefined and essentially indefinable. The complexity of the subject is often lost sight of behind such semantic and conceptual shortcuts and the discussion of farm credit's role and potential role in rural development is too often carried on without very much examination of the validity of implicit underlying assumptions. These errors may result in an inefficient use of resources in the agricultural, financial and public sectors, compromising the welfare of borrowers and of the community as a whole. Examples relating to Kenya and nearby countries are incorporated into this critique

A penny saved: Kenya's cooperative saving scheme and some related aspects of rural finance

Within two years of its transformation from a pilot project to an on-going savings programme for smallholders, the Cooperative Savings Scheme's balances increased from Sh 2 million to almost Sh 37 million, and the number of depositors exceeded 110,000. By the close of 1974 these balances will no doubt exceed Sh 60 million, belonging to 150,000 co-operators. Cooperative Savings Scheme balances have a considerable impact on cooperative finance and at the close of 1973 exceeded by Sh 22 million the amount of loans outstanding on the books of participating societies under the Cooperative Production Credit Scheme, a companion programme. The Cooperative Savings Scheme operates in rural areas only and most depositors are members of primary coffee marketing societies. The Cooperative Savings Scheme exhibits several operational and management problems and cannot yet be considered mature. However, its performance during a period of generally favourable conditions in the smallholder coffee sector suggests that considerable rural savings capacity exists among small cash crop farmers and that this capacity is not tapped by financial institutions other than cooperatives. Savings is defined simply as deferred consumption, and the financier's view of savings as a funds flow phenomenon is more relevant to rural development than are considerations of savings as an institutional phenomenon motivated by long run considerations

A critical survey of approaches to the role of credit in smallholder development

Recent literature on farm credit in the context of rural development displays an exciting variety of conflicting opinions. The argument that farm credit is essential to smallholder development is often couched in terms of the "need" for credit, a concept which is frequently undefined and essentially undefinable. The complexity of the subject is often lost sight of behind such semantic and conceptual shortcuts, and the discussion of farm credit's role and potential role in rural development is too often carried on without very much examination of the validity of implicit underlying assumptions, These errors may result in an inefficient use of resources in the agricultural, financial and public sectors, compromising the welfare of borrowers and of the community as a whole. Examples relating to Kenya and nearby countries are incorporated into this critique