The Microfinance Business Model: Enduring Subsidy and Modest Profit

The Microfinance Business Model: Enduring Subsidy and Modest Profit
Cull, Robert, Asli Demirgurc-Kunt, and Jonathan Morduch. 2016. "The Microfinance Business Model: Enduring Subsidy and Modest Profit," NYU Financial Access Initiative working paper, July 2016.

Cull, Robert, Asli Demirgurc-Kunt, and Jonathan Morduch

Recent evidence suggests only modest social and economic impacts of microfinance. Favorable cost-benefit ratios then depend on low costs. We use proprietary data on 1335 microfinance institutions between 2005 and 2009, jointly serving 80.1 million borrowers, to calculate the costs of microfinance and other elements of the microfinance business model. We calculate that on average, subsidies amounted to $132 per borrower, but the distribution is highly skewed. The median microfinance institution used subsidies at a rate of just $26 per borrower, and no subsidy was used by the institution at the 25th percentile. These data suggest that, for some institutions, even modest benefits could yield impressive cost-benefit ratios. At the same time, the data show that subsidy is large for some institutions. Counter to expectations, the most heavily-subsidized group of borrowers are customers of the most commercialized institutions, with an average of $275 per borrower and median of $93. Customers of NGOs, which focus on the poorest customers and on women, receive far less subsidy: the median microfinance NGO used subsidy at a rate of $23 per borrower, and subsidy for the NGO at the 25th percentile was just $3 per borrower.

Discrete Prices and the Incidence and Efficiency of Excise Taxes

Discrete Prices and the Incidence and Efficiency of Excise Taxes
Under Review

Rao, Nirupama S. (with Chris Conlon)

This paper uses detailed UPC-level data from Nielsen to examine the relationship between excise taxes, retail prices, and consumer welfare in the market for distilled spirits. Empirically, we document the presence of a nominal rigidity in retail prices that arises because firms largely choose prices that end in ninety-nine cents and change prices in whole-dollar increments. Theoretically, we show that this rigidity can rationalize both highly incomplete and excessive pass-through estimates without restrictions on the underlying demand curve. A correctly specified model, such as an (ordered) logit, takes this discreteness into account when predicting the effects of alternative tax changes. We show that explicitly accounting for discrete pricing has a substantial impact both on estimates of tax incidence and the excess burden cost of tax revenue. Quantitatively, we document substantial non-monotonicities in both of these quantities, expanding the potential scope of what policymakers should consider when raising excise taxes.

State of New York City's Housing & Neighborhoods in 2015

State of New York City's Housing & Neighborhoods in 2015
NYU Furman Center. Released May 9, 2016.

Maxwell Austensen, Ingrid Gould Ellen, Luke Herrine, Brian Karfunkel, Gita Khun Jush, Shannon Moriarty, Stephanie Rosoff, Traci Sanders, Eric Stern, Michael Suher, Mark A. Willis, and Jessica Yager

The State of New York City’s Housing and Neighborhoods report, published annually by the NYU Furman Center, provides a compendium of data and analysis about New York City’s housing, land use, demographics, and quality of life indicators for each borough and the city’s 59 community districts. The report combines timely and expert analysis of NYU Furman Center researchers with data transparency.

The 2015 report, released on May 9, 2016, is presented in three parts:

Part 1: Focus on Gentrification

Each year, the State of the City report describes, contextualizes, and provides analysis on a pressing and policy-relevant issue affecting New York City. In 2015, the report focuses on gentrification in New York City, exploring and comparing changes over time in the city's neighborhoods to better understand how rapidly rising rents affect residents.

Part 2: Citywide Analysis

The Citywide Analysis provides a broad, longitudinal analysis of the New York City's housing and neighborhoods. The chapter is divided into five parts: New Yorkers; land use and the built environment; homeowners and their homes; renters and their homes; and neighborhood services and conditions.

Part 3: City, Borough, and Community District Data

The data section provides current and historical statistics for over 50 housing, neighborhood, and socioeconomic indicators at the city, borough, and community district levels. It also includes indicator definitions and rankings; methods; and an index of New York City’s community districts and sub-borough areas.

Fifty Years of Historic Preservation in New York City

Fifty Years of Historic Preservation in New York City
NYU Furman Center. Published March 2016.

Ingrid Gould Ellen, Brian J. McCabe, and Eric Edward Stern

The year 2015 marked the 50th anniversary of the creation of New York City’s Landmarks Preservation Commission (LPC), which has the authority to designate areas as historic districts and to designate individual, interior and scenic landmark sites. The LPC aims to achieve a wide array of goals through preservation, from safeguarding historic assets to promoting tourism, enhancing property values, and furthering economic development. This fact brief does not seek to assess progress in meeting those goals, but rather to describe the extent of historic preservation in New York City and explore some of the differences between historic districts and non-regulated areas. This brief draws on our full report, Fifty Years of Historic Preservation, and focuses on historic districts as such districts include the majority of parcels regulated by the LPC.


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