Finance

Measuring School Finance Equity using School Finance Statistics

Measuring School Finance Equity using School Finance Statistics
Encyclopedia of Education Economics and Finance, editors Dominic Brewer and Lawrence Picus, Sage, CA

Leanna Stiefel
09/16/2014

This entry briefly outlines the origin of school finance statistics and describes the Berne-Stiefel framework for identifying the values of school finance equity.  It then introduces various measures of horizontal, vertical, and taxpayer equity and concludes by highlighting school finance research that utilizes these measures.

Credit is Not a Right [REVISED]

Credit is Not a Right [REVISED]
Forthcoming in volume edited by Tom Sorell and Luis Cabrera: Microfinance, Rights, and Global Justice. Cambridge University Press.

Gershman, John and Jonathan Morduch
09/15/2014

Muhammad Yunus, the microcredit pioneer, has proposed that access to credit should be a human right. We approach the question by drawing on fieldwork and empirical scholarship in political science and economics. Evidence shows that access to credit may be powerful for some people some of the time, but it is not powerful for everyone all of the time, and in some cases it can do damage. Yunus’s claim for the power of credit access has yet to be widely verified, and most rigorous studies find microcredit impacts that fall far short of the kinds of empirical assertions on which his proposal rests. We discuss ways that expanding the domain of rights can diminish the power of existing rights, and we argue for a right to non-discrimination in credit access, rather than a right to credit access itself.

 

Is Micro Too Small? Microcredit vs. SME Finance

Is Micro Too Small? Microcredit vs. SME Finance
World Development 43: 288-297. 2013.

Bauchet, Jonathan and Jonathan Morduch
12/15/2013

Microcredit and SME finance are often pitched as alternative strategies to create employment opportunities in low-income communities. So far, though, little is known about how employment patterns compare. We integrate evidence from three surveys to show that, compared to Bangladeshi microcredit customers, typical SME employees in Bangladesh have more education and professional skills, and live in households that are notably less poor. SME jobs also require long work weeks, clashing with family responsibilities. The evidence from Bangladesh rejects the idea that SME finance more efficiently creates jobs for the population currently served by microcredit.

Pension Obligation Bonds and Government Spending

Pension Obligation Bonds and Government Spending
Public Budgeting and Finance, 33(4):43-65

Thad Calabrese and Todd Ely
10/29/2013

We examine the use of pension obligation bonds (POBs) as a financing strategy to address the effects of unfunded pension liabilities on government operating budgets. POBs are publicly marketed as money-saving mechanisms that reduce pension system payments while allowing for increased spending on other government priorities. We review general POB usage and examine whether POBs altered school district spending patterns in Oregon and Indiana. Our results indicate that districts issuing POBs have not increased educational spending relative to other districts. Because POBs cost money to issue and manage, decision makers are encouraged to consider annual budgetary effects prior to issuance.

Banks and Microbanks

Banks and Microbanks
Journal of Financial Services Research (2014) 46:1–53. DOI 10.1007/s10693-013-0177-z

Robert Cull, Asli Demirgüç-Kunt, and Jonathan Morduch
09/16/2013

We combine two datasets to examine whether the presence of banks affects the profitability and outreach of microfinance institutions.We find evidence that competition matters. Greater bank penetration in the overall economy is associated with microbanks pushing toward poorer markets, as reflected in smaller average loans sizes and greater outreach to women. The evidence is particularly strong for microbanks relying on commercial-funding and using traditional bilateral lending contracts (rather than group lending methods favored by microfinance NGOs). We consider plausible alternative explanations for the correlations, including relationships that run through the nature of the regulatory environment and the structure of the banking environment, but we fail to find strong support for these alternative hypotheses.

Moroccan Migrants as Unlikely Captains of Industry: Remittances, Financial Intermediation, and La Banque Centrale Populaire

Moroccan Migrants as Unlikely Captains of Industry: Remittances, Financial Intermediation, and La Banque Centrale Populaire
In S. Eckstein, ed. Immigrant Impact in their Homelands. Durham: Duke University Press.

Iskander, N.
09/06/2013

The impact that remittances – the monies that migrants send home – have on the development on migrant-sending economies is a matter of considerable debate. This essay presents the case of Morocco and its state-controlled bank, La Banque Centrale Populaire (BCP), to argue that the major determinant of remittance impact on development is the quality and breadth of financial intermediation to which migrants have access. By providing a set of financial tools that allowed migrants to deposit, save, and invest with the institution, the BCP, since 1969, simultaneously made remittances funds available the migrants for their personal expenditures and to the Moroccan government for large-scale industrial investment. However, to create financial services for migrants with an appeal broad enough to bring significant amounts of remittance liquidity into the banking sector, BCP had to engage migrants in an open and collaborative process of product design. Ultimately, this paper argues, migrants’ involvement in the design of financial products enabled them to use the banking system to redirect remittances resources to rural and semi-rural areas most migrants were from, and to amend the industrial development priorities of the Moroccan government.

Economics, First Edition.

Economics, First Edition.
McGraw-Hill/Irwin.

Karlan, Dean and Jonathan Morduch
09/06/2013

Built from the ground up to focus on what matters to students in today’s high-tech, globalized world, Dean Karlan and Jonathan Morduch’s Economics represents a new generation of products, optimized for digital delivery and available with the best-in-class adaptive study resources in McGraw-Hill’s LearnSmart Advantage Suite. Engagement with real-world problems is built into the very fabric of the learning materials as students are encouraged to think about economics in efficient, innovative, and meaningful ways.

Drawing on the authors’ experiences as academic economists, teachers, and policy advisors, a familiar curriculum is combined with material from new research and applied areas such as finance, behavioral economics, and the political economy, to share with students how what they’re learning really matters. This modern approach is organized around learning objectives and matched with sound assessment tools aimed at enhancing students’ analytical and critical thinking competencies. Students and faculty will find content that breaks down barriers between what goes on in the classroom and what is going on in our nation and broader world.

By teaching the right questions to ask, Karlan and Morduch provide readers with a method for working through decisions they’ll face in life and ultimately show that economics is the common thread that enables us to understand, analyze, and solve problems in our local communities and around the world.

Financial Incentives and Fertility

Financial Incentives and Fertility
Review of Economics and Statistics, Volume 95 (Number 1), March 2013, pp. 1-20.

Dehejia, Rajeev and Alma Cohen.
03/01/2013

This paper investigates how fertility responds to financial incentives. We construct a large, individual-level panel data set of over 300,000 Israeli women during the period 1999–2005 with comprehensive information on their fertility histories, education, religious affiliation, ethnicity, and income. We exploit variation in Israel’s child subsidy program to identify the impact of changes in the price of a marginal child on fertility. We find a positive, statistically significant, and economically meaningful price effect on fertility. This positive effect is strongest for households in the lower range of the income distribution, weakens with income, and is present in all religious and ethnic subgroups. There is also a significant price effect on fertility among women who are close to the end of their lifetime fertility, suggesting that at least part of the effect that we estimate is due to a reduction in total fertility. Finally, we investigate how changes in household income affect fertility choices. Consistent with Becker (1960) and Becker and Tomes (1976), we find that the income effect is small in magnitude, and is negative at low income levels and positive at high income levels.

Beyond Foundation Funding: Revenue-Generating Strategies for Sustainable Social Change

Beyond Foundation Funding: Revenue-Generating Strategies for Sustainable Social Change
RCLA Report; February 2013

Jennifer Dodge, Amparo Hofmann-Pinilla, Angela Beard and Caitlin Murphy
02/05/2013

As social change organizations diversify their funding to be less reliant on foundations, they are finding creative ways to adapt traditional strategies and experiment with new ones. This report from RCLA and the Mertz Gilmore Foundation offers specific revenue-generation strategies and examples of nonprofits putting them into practice to offer immediate, actionable guidance for social change organizations, funders and technical assistance providers.

Balanced Budget Requirements and State Spending: A Long-Panel Study

Balanced Budget Requirements and State Spending: A Long-Panel Study
Public Budgeting & Finance 33(2): 1-18.

Smith, Daniel L., and Yilin Hou.
01/01/2013

This study tests the effects of balanced budget requirements on three measures of state expenditure using data on 48 states for the years 1950 to 2004. We find that the following rules are effective in constraining expenditures: 1) requiring that the governor submit a balanced budget; 2) placing controls on supplemental appropriations; and 3) prohibiting the carry-over of a deficit from one fiscal year or biennium into the next. The latter two rules exert larger individual effects than the first. All else equal, states can best improve their prospects of reigning in spending by instituting technical rules that govern budgetary outcomes, as opposed to political rules that dictate how the budget is assembled and approved. 

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