Finance

Foreword

Foreword
In Stuart Rutherford, The Pledge: ASA, Microfinance and Peasant Politics in Bangladesh. New York: Oxford University Press. 2009.

Jonathan Morduch
02/02/2009

Microfinance Meets the Market

Microfinance Meets the Market
February Journal of Economic Perspectives 23(1), Winter:  167-192.

Morduch, J., Cull, R. & Demirguc-Kunt, A.
02/01/2009

In this paper, we examine the economic logic behind microfinance institutions and consider the movement from socially oriented nonprofit microfinance institutions to for-profit microfinance. Drawing on a large dataset that includes most of the world's leading microfinance institutions, we explore eight questions about the microfinance "industry": Who are the lenders? How widespread is profitability? Are loans in fact repaid at the high rates advertised? Who are the customers? Why are interest rates so high? Are profits high enough to attract profit-maximizing investors? How important are subsidies? The evidence suggests that investors seeking pure profits would have little interest in most of the institutions we see that are now serving poorer customers. We will suggest that the future of microfinance is unlikely to follow a single path. The recent clash between supporters of profit-driven Banco Compartamos and of the Grameen Bank with its "social business" model offers us a false choice. Commercial investment is necessary to fund the continued expansion of microfinance, but institutions with strong social missions, many taking advantage of subsidies, remain best placed to reach and serve the poorest customers, and some are doing so at a massive scale. The market is a powerful force, but it cannot fill all gaps.

The Unbanked: Evidence from Indonesia

The Unbanked: Evidence from Indonesia
October   World Bank Economic Review 22(3): 517-537

Morduch, J. & Jonston Jr., D.
10/01/2008

To analyze the prospects for expanding financial access to the poor, bank professionals assessed 1,438 households in six provinces in Indonesia to judge their creditworthiness. About 40 percent of poor households were judged creditworthy according to the criteria of Indonesia's largest microfinance bank, but fewer than 10 percent had recently borrowed from a microbank or formal lender. Possessing collateral appeared as a minor determinant of creditworthiness, in keeping with microfinance innovations. Although these households were judged able to service loans reliably, most desired small loans. Calculations show that the bank, given its current fee structure and banking practices, would lose money when lending at the scales desired. So, while innovations have helped to extend financial access, it remains difficult to lend in small amounts and cover costs.

Equity and Accountability: The Impact of State Accountability Systems on School Finance

Equity and Accountability: The Impact of State Accountability Systems on School Finance
Journal of Public Budgeting & Finance, 28 (3): 1-22

Rubenstein, R. & Ballal, S., Stiefel, L., Schwartz, A.E.
01/01/2008

Using an 11-year panel data set containing information on revenues, expenditures, and demographics for every school district in the United States, we examine the effects of state-adopted school accountability systems on the adequacy and equity of school resources. We find little relationship between state implementation of accountability systems and changes in school finance equity, though we do find evidence that states in which courts overturned the school finance system during the decade exhibited significant equity improvements. Additionally, while implementation of accountability per se does not appear linked to changes in resource adequacy, states that implemented strong accountability systems did experience improvements.

Smart Subsidy

Smart Subsidy
Chapter 5 in Bernd Balkenhol, ed., Microfinance and Public Policy: Outreach, Performance and Efficiency. Palgrave/Macmillan, 2007, pp. 72-85.

Jonathan Morduch
12/26/2007

Improving The Management Of Care For High- Cost Medicaid Patients

Improving The Management Of Care For High- Cost Medicaid Patients
Health Affairs, Nov/Dec 2007, Vol. 26 Issue 6, p1643-1655, 13p.

Billings, J. & Mijanovich, T.
11/01/2007

The article discusses the improvement of care management for high-cost Medicaid patients. It explores on Medicaid budgets which have prompted policymakers to redouble efforts to explore ways of boosting efficiency in care delivery, particularly for people with high-cost and chronic conditions. It also illustrates John Billings and Tod Mijanovich's article which examines the cost-effectiveness of care management for chronic disease patients treated in fee-for-service practice. The authors present an algorithm that identifies patients at high risk of future hospitalizations and offer a business-case analysis about the rate of reduction in future hospitalization and the cost of the intervention.

Social Programs and Household Size: Evidence from New York

Social Programs and Household Size: Evidence from New York
Population Research and Policy Review Vol. 26 No. 4.

Ellen, I.G. & O'Flaherty, B.
07/01/2007

What determines how many adults live in a house? How do people divide themselves up among households? Average household sizes vary substantially, both over time and in the cross-section. In this paper, we describe how a variety of government policies affect living arrangements, intentionally or not. Using data from a survey of households in New York City, we find that these incentives appear to have an impact. Specifically, households receiving these housing and income subsidies are smaller on average (measured by number of adults). The impacts appear to be considerably larger than those that would occur if the programs were lump-sum transfers. Small average household size can be extremely expensive in terms of physical and environmental resources, higher rents, and possibly homelessness. Thus, we encourage policymakers to pay greater heed to the provisions built into various social policies that favor smaller households.

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