Microcredit,Social Capital,and Common Pool Resources

The paper presents a conceptual scheme for understanding the impact of microcredit—small loans to poor borrowers—on common pool resources. Impacts on common pool resources are posited to occur through changes in household production and consumption, the focus on women, and the social capital created from group training, decision-making, and risk-bearing with the group lending techniques characteristic of many microcredit programs. Enhanced human and social capital can improve environmental outcomes. A nonrandom survey of microfinance organizations suggests increased environmental awareness and potential CPR stewardship through microcredit, but empirical research is needed to demonstrate actual impacts.     

The impact of microcredit on women's empowerment: evidence from China

The impact of microcredit on women's empowerment remains controversial, as documented in the microfinance literature. While some studies claim that microcredit helps women increase their income earning abilities, leading to greater power to overcome cultural asymmetries, others contend that small loans allocated to women are usually controlled by their spouses, which results in more severe subordination of women and leaves them more vulnerable to the patriarchy system within the household and/or at society level. This paper evaluates the empowerment impact of microcredit on rural women in China. Logistic regression is employed for empirical analysis and data are collected through a rural household survey. The results confirm that microcredit has a significant impact on five dimensions of women's empowerment, ranging from economic security to awareness of social/legal issues.     

Microcredit on a Large Scale: Appraising the Thailand Village Fund

The Thailand village fund (VF) is the second‐largest microcredit scheme in the world. Nearly 80 000 elected local VF committees administer loans that reach 30 percent of all households. The value of VF loans has remained steady since 2006, even without new infusions of government funds, and loans go disproportionately to the poor. Based mainly on a custom‐built survey of over 3000 local VFs conducted in 2010, we evaluate the performance of the VF. As expected, profit rates are hard to model, but our regression analysis shows that loan recovery rates, total lending and the proportion of loans going to the poor are all higher when a VF borrows additional funds from a formal bank and on‐lends to households, as done by one in five VFs. An economic analysis suggests, tentatively, that VF benefits exceed the costs. A financial analysis shows that VFs more than break even, with receipts covering their cash costs. Most VFs are social rather than financial intermediaries; they have little incentive to take risks or to innovate, which explains why VF lending has not kept pace with the growth of the Thai economy.     

Microcredit games with noisy signals: Contagion and free-riding

The advent of microcredit financing has remarkably improved access to credit for the poor in many developing countries. Although several microcredit programs have adopted the joint liability scheme, economic theory suggests that joint liability could increase strategic default through contagion and free-riding. This paper aims at studying the extent of free-riding and contagion in joint liability lending. By using data from experimental repayment games conducted in Vietnam, with noisy signals that resemble actual microcredit programs, we found that subjects were motivated to free-ride under the joint liability scheme. While most empirical research in this area has focused on the problem of contagion, our findings point to the significance of investigating free-riding behavior under joint liability schemes. Analyses reveal that the free-riding tendency may be led by the irresponsiveness of repayment and shouldering behavior to the partner’s seemingly strategic default in the previous round.     

Pro-poor microcredit in South Africa: cost-efficiency and productivity of South African pro-poor microfinance institutions

This article compares the performance of selected South African microcredit non-governmental organisations (NGOs) that have a poverty-alleviation focus against various benchmarks drawn from the MicroBanking Bulletin. Donors, governments and many analysts regard sustainability as the benchmark of microfinance institutions' (MFIs) performance. However, the most relevant question is whether microcredit NGOs are doing as well as they can in their context. Of particular contextual importance is income inequality in a society. South Africa has the world's second worst income inequality, after neighbouring Botswana. This creates a situation in which microcredit NGOs must recover ‘First World’ costs, particularly salaries, from revenues based on clients who can only afford loans on a par with Third World countries. Compounding this situation are structural obstacles to microenterprise in South Africa, as well as obstacles to productivity in microcredit NGOs. Taken together, this creates a ‘salary burden’ for South African microcredit NGOs, which is the highest in the world according to relevant benchmarks. South African MFI managers face significant obstacles to improving productivity to compensate for the divergence between staff and client living levels. These include an inadequate skills base, the small scale of the market, rapid labour turnover, and limited resources for capacity development. South African MFIs face the options of moving upmarket (which many have done), adopting methodological innovation or new product development, or closure. Of these, there is a strong argument to be made for supported savings and credit approaches as an alternative to NGO-based microcredit. Such an approach has the advantages of greater voluntary input and social capital formation.     

信息不对称、抵押物与商业银行消费贷款经营行为——基于商业银行微观业务数据的经验分析

本文基于国内某银行消费贷款业务数据,实证研究了信息不对称条件下抵押物对商业银行消费贷款经营行为的影响。结果表明：（1）抵押物能够显著影响商业银行消费贷款配给行为,提供抵押物的借款人获得的借款额度明显较高,且抵押物配给效果受信息不对称程度影响明显;（2）抵押物与消费贷款违约风险呈现显著的负相关关系,抵押物作用机制中的“客户选择”效应占主导地位;（3）抵押物决定与借款人事前风险评估无明显关联,但与借款人抵押物可获得性高度相关,表明银行业务经营中存在一定程度的抵押物依赖现象。     

Does productive microcredit improve rural children's education? Evidence from rural Vietnam

Whether increasing access to microcredit results in better educational outcomes for children’s education in rural areas remains an important but inconclusive topic in development literature. This paper contributes to this strand of research both theoretically and empirically. We develop a theoretical model where a representative household uses microcredit to fund its family business and maximises its lifetime utility. Based on the outcomes of its business, the parents make an optimal decision on the level of their children’s schooling investment. Solving the maximisation problem, we show that a household’s optimal education for its children is directly related to the level of microcredit. Empirically, we utilise the Vietnam Access to Resources Household Survey (VARHS) dataset from 2008 to 2016 to estimate the impact of microcredit on rural children’s schooling. We find that microcredit borrowing by rural households negatively affects their children’s education, which is more profound for boys than girls. Policymakers need to be aware of such side effects in designing microcredit policy and adopt auxiliary measures, such as incorporating a clause on children's education in the borrowing terms, to alleviate the negative impact on children’s educational outcomes.     

Information contents of collateral under heterogeneous borrower qualities on the bank loans market in China

We analyze the risk of default and provision of collateral for bank loans made to firms of varied credit qualities using a unique dataset obtained from a major state-owned commercial bank in China. Both high and low quality borrowers provide collateral more often than medium quality debtors do. Using models that explicitly incorporate heterogeneous borrower qualities, we find a positive relation between collateralization and risk of default for loans issued to debtors with low credit ratings. In contrast, collateral provided by debtors with high credit ratings is negatively associated with the risk of default. These results suggest that low quality borrowers may be required to provide collateral at the bank's request to mitigate moral hazard problem. On the other hand, high quality borrowers may provide collateral willingly to signal quality in order to mitigate adverse selection problem when competing for getting access to bank loans. Our findings shed new lights on different information contents of collateral on the bank loans market of China, and have important implications for banks in screening, contracting and monitoring the risk of commercial loans for clients with diverse credit qualities.     

Demystifying Nonparticipation in Microcredit: A Population-Based Analysis

Given the current popularity of microcredit schemes as a means of poverty alleviation, their accessibility to the poorest is of obvious concern. This paper examines a targeted microcredit program in Bangladesh to assess its coverage among the poor, and to identify program- and client-related barriers impeding participation. A population survey of over 24,000 households reveals that although three-quarters are eligible for microcredit, less than one-quarter participate. Rates of participation in microcredit are higher among poorer households. Multivariate analysis identifies lack of female education, small household size and landlessness as risk factors for nonparticipation, based on a 7% random sample of this population. The implications of these findings for poverty alleviation policies and programs are discussed.     

Does microcredit reduce the gender gap in employment? Evidence from Egypt

In Egypt, there is a remarkable gap between men's and women's participation in the labour market. In this study, we examine the impact of microcredit on the labour supply of men and women and subsequently investigate whether microcredit can reduce the employment gap between men and women in Egypt. We find a negative effect of microcredit on men's employment, but a positive effect on the employment of women. Borrowing from a microcredit source increases the probability of women working by 8.5 percentage points and mainly affects self‐employed work. We also find a positive effect of microcredit on work in small businesses. This finding suggests that women can use microcredit to open small shops or household businesses. Finally, using decomposition analysis, we find that microcredit reduces the overall employment gap between men and women by 0.743%.     

Formal and informal rural credit in the Mekong River Delta of Vietnam: Interaction and accessibility

This paper examines the factors influencing rural households’ access to credit in the Vietnamese market. Analysis confirms an interaction effect between informal and formal credit sectors in which informal credit positively influences accessibility to microcredit programs. Ignoring this interaction effect may lead to microcredit providers making loan decisions that are less than optimal. In the formal credit sector, the lowest income group faces more credit rationing than other groups, despite the fact that microcredit programs are designed to target households at the bottom of the income pyramid. Results demonstrate that land holding status, informal interest, and informal loan duration are important factors influencing access to informal credit. Factors influencing microcredit accessibility include local government employee status, credit group membership, a “poor” certificate, educational attainment, working skills and village road access. To reduce reliance on informal credit and improve microcredit accessibility, rural households should actively participate in a microcredit group.     

Credit access and transferable land rights

This paper develops a model in which small landholders earna return from their land but can increase their income by borrowingfunds to invest in a risky project. The model allows us to studythe impact of different legal policies governing the use ofland as collateral in debt contracts. In this framework, wefind that legislation sanctioning the use of land as collateralcan sometimes have unintended consequences. In particular, whenfarmers and banks have asymmetric valuations over land plots,introducing collateral based loans can lead to a reduction inthe number of low-risk farmers that choose to borrow funds.This finding offers one explanation for why farmers in countrieslike Bolivia and Mexico have resisted policies that promiseto facilitate the use of land as collateral.     

The Impact of Informal Financial Groups on Socio‐economic Development in Tanzania

Financial deepening is universally considered to be one of the vital means to trigger inclusive growth, in economies the world over, Tanzania being no exception. However, the lack of traditional collateral among the poor has made it virtually impossible for them to have access to financial services particularly in the formal financial institutions. It is in this context that the informal financial groups (IFGs) are so crucial in filling the financial inclusiveness gap among the poor in Tanzania. It is thus crucial that the efficacy of IFGs in improving the well‐being of the poor is assessed. It is in this context that the present study employs a quasi‐experiment mixed methodology to answer research questions. Findings have categorically shown that membership to IFGs has a positive and significant impact on various socio‐economic variables. Efforts to intensify education and training activities in IFGs, and their access to loans are some of the key recommendations that this paper suggests. It is hoped that the newly promulgated 2017 National Microfinance Policy shall be implemented to that effect.     

Paying back to borrow more: Reputation and bank credit access in early America

The birth of commercial banking in New England after the American Revolution provides an important case to examine banking development under asymmetric information. Similar to credit markets in developing countries today, bank borrowers of early America usually had little or no collateral. This paper uses a unique data set based on loans between 1803 and 1833 for Plymouth Bank to examine bank lending policies in the absence of collateral. Empirical evidence suggests that borrowers with little collateral established their credit-worthiness through repeated interaction with banks.     

IS A GOVERNMENTAL MICRO‐CREDIT PROGRAM FOR THE POOR REALLY PRO‐POOR? EVIDENCE FROM VIETNAM

It is argued that without collateral the poor often face binding borrowing constraints in the formal credit market. This justifies a micro‐credit program, which is operated by the Vietnam Bank for Social Policies to provide the poor with preferential credit. The present paper examines poverty targeting and the impact of the micro‐credit program. It is found that the program is not very pro‐poor in terms of targeting. The nonpoor account for a larger proportion of the participants. The nonpoor also tend to receive larger amounts of credit compared to the poor. However, the program has reduced the poverty rate of the participants. The positive impact is found for all three Foster‐Greer‐Thorbecke poverty measures.     

Financial Statement Quality and Debt Contracting: Evidence from a Survey of Commercial Lenders

We survey commercial bank lenders to better understand how they evaluate and react to variation in financial statement quality and how they view recent changes in accounting standards. A unique aspect of this study is that our respondents focus on medium‐size loans to private companies. In fact, more than 90 percent of the survey respondents primarily make credit decisions on loans between $250 thousand and $50 million. This is in contrast to prior archival research, which focuses primarily on very large loans to public firms or very small loans to private firms. We find that lenders in our sample distinguish among financial statements in terms of quality, including conservatism, primarily on the basis of accrual patterns and restatements. While this general result holds throughout our sample, financial statement quality is substantially more important for lenders making larger loans (over $10 million) as compared to very small loans (under $1 million). In addition, bank lenders are much more likely to respond to low‐quality reporting with collateral and guarantee requirements than with an increase in the interest rate charged. This finding is consistent for lenders making both larger and smaller loans. Finally, despite concerns in the academic literature, bank lenders in our sample actually hold a neutral‐to‐positive view of recent changes in accounting standards. In addition, most do not support current efforts to exempt private companies from some accounting standards.     

In the shadow of big tech lending

We investigate the impact of Big Tech lending on non-bank traditional lenders, which have a more overlapping clientele with Big Tech lenders than traditional banks. Our empirical methodology exploits geographical differences in Big Tech penetration ratios and adopts the instrumental variable (IV) approach using the FinTech payment adoption ratio and the distance to the Big Tech's headquarter. We find that the competition from Big Tech worsens the performance of branches facing stronger Big Tech competition by reducing the number of borrowers and the amount of loans. Moreover, branches in cities highly penetrated by Big Tech lending tighten the lending standard by reducing loan-to-value (LTV) ratios, measured as the approved loan amount per unit collateral value, while keeping the average collateral requirement unchanged. Our findings are consistent with the cream-skimming hypothesis that Big Techs possess better screening technology and reduce the quality of borrowers applying for traditional loans. Our results document novel changes in and responses of the non-bank traditional lending business in the Big Tech era.     

不良贷款约束下中国上市商业银行全要素生产率研究：基于Luenberger指数的分析

借助Luenberger指数法,本文测度了中国16家上市商业银行2005—2011年间考虑不良贷款约束的全要素生产率。研究表明,不考虑坏产出约束时的全要素生产率存在高估问题。与以往结论不同,我们发现中国上市商业银行的年平均全要素生产率退步了3．00％,7年间累积退步18．01％。从分类角度看,国有银行对不良贷款管理效率较差,但应对冲击能力强;股份制银行机制灵活,能有效控制不良贷款的扩张;城市商业银行具有区域优势,可对贷款进行更为有效的管理。本研究对中国银行业监管与改革具有参考意义。     

The Social Performance and Distributional Consequences of Contract Farming: An Equilibrium Analysis of the Arachide de Bouche Program in Senegal

This paper is an empirical analysis of the impact of a contract-farming program in Senegal. We examine the access of poorer community members to contracts and the effect of the program on the income of participants. The program performs very well on both counts: participants and nonparticipants are indistinguishable by wealth measures and farmers increase their income substantially by participating in the program. We attribute the former to the program's mobilization of local information through its use of village intermediaries, permitting the substitution of social collateral for physical collateral and making the program more accessible to the poor.     

Growth opportunities,collateral and debt structure: the case of the Japanese machine manufacturing firms

We explore the determinants of debt structure by analyzing the Japanese machine manufacturing firms’ data from 1990 through 1996. We find that firms with abundant growth opportunities and scarce collateral are likely to borrow from banks rather than to issue bonds. This is robust even if we consider the simultaneous decision of the debt composition and leverage or managerial incentive. We also find that firms with abundant growth opportunities or collateral tend to depend on equity rather than on debt. Though banks reduce the agency costs of debt for growing firms, equity costs less than bank loans for them.