International Development

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.

The Impact of Microcredit on the Poor in Bangladesh: Revisiting the Evidence

The Impact of Microcredit on the Poor in Bangladesh: Revisiting the Evidence
Journal of Development Studies

David Roodman and Jonathan Morduch
06/03/2013

We replicate and reanalyse the most influential study of microcredit impacts (Pitt and Khandker, 1998). That study was celebrated for showing that microcredit reduces poverty, a much hoped-for possibility (though one not confirmed by recent randomized controlled trials). We show that the original results on poverty reduction disappear after dropping outliers, or when using a robust linear estimator. Using a new program for estimation of mixed process maximum likelihood models, we show how assumptions critical for the original analysis, such as error normality, are contradicted by the data. We conclude that questions about impact cannot be answered in these data.

Overweight, obesity, and inactivity and urban design in rapidly growing Chinese cities

Overweight, obesity, and inactivity and urban design in rapidly growing Chinese cities
Health & Place, 21, 29-38. http://dx.doi.org/10.1016/j.healthplace.2012.12.009

Day, K, M Alfonzo, Y F Chen, Z Guo, and K K Lee
05/01/2013

China faces rising rates of overweight, obesity, and physical inactivity among its citizens. Risk is highest in China’s rapidly growing cities and urban populations. Current urban development practices and policies in China heighten this risk. These include policies that support decentralization in land use planning; practices of neighborhood gating; and policies and practices tied to motor vehicle travel, transit planning, and bicycle and pedestrian infrastructure. In this paper, we review cultural, political, and economic issues that influence overweight, obesity, and inactivity in China. We examine key urban planning features and policies that shape urban environments that may compromise physical activity as part of everyday life, including walking and bicycling. We review the empirical research to identify planning and design strategies that support physical activity in other high-density cities in developing and developed countries. Finally, we identify successful strategies to increase physical activity in another growing, high-density city – New York City – to suggest strategies that may have relevance for rapidly urbanizing Chinese cities.

Migration and development, global South / Mexico-Morocco

Migration and development, global South / Mexico-Morocco
I. Ness, ed. The Encyclopedia of Global Human Migration. Wiley Blackwell

Iskander, N.
02/04/2013

In recent years, the relationship between migration and development has received renewed attention, and analysts, policy-makers, and development experts have returned to the question of how to use emigration to foster economic growth in countries and communities of origin. The main thrust of this inquiry has focused on how to use remittances – the monies that migrants send back home – to support economic activity (de la Garza & Orozco 2002; Orozco 2002; Munzele Maimbo & Ratha 2005; Ratha 2005). However, among countries with high emigration rates, a handful of governments have expanded their emphasis past remittances to create policies that link emigration and development in a more comprehensive way (Castles & Delgado Wise 2008). Morocco and Mexico feature prominently among them. Both countries have policies to link emigration with local and national economic transformation that reach beyond a narrow focus on remittances, and that, more importantly, are creative, participatory, and dynamic (Iskander 2010). At their outset, however, the policies were as single-minded in their focus on remittances as any of the more mercenary examples of today.

How Microfinance Really Works

How Microfinance Really Works
The Milken Institute Review

Morduch, Jonathan
01/01/2013

About half of the world’s adults lack bank accounts. Most of these “unbanked” are deemed too expensive to serve, or not worth the hassle created by banking regulations. But what may be good business from a banker’s perspective isn’t necessarily what’s best for society. The inequalities that persist in financial access reinforce broader inequalities in the distribution of income and wealth. This is the opening for microfinance and also its challenge. Microlending has been sold as a practical means to get capital into the hands of small-scale entrepreneurs who can then earn their way out of poverty. The idea appeals to our impulse to help people help themselves and to our conviction that bottom-up development depends on the embrace of the market. By eschewing governments and traditional charities, the sector promises to sidestep the bureaucracy and inertia that have hobbled other attempts to expand the opportunities of the poor.

Banking The World

Banking The World
The MIT Press

(eds.) Cull, Robert, Asli Demirgüç-Kunt and Jonathan Morduch
12/01/2012

About 2.5 billion adults, just over half the world’s adult population, lack bank accounts. If we are to realize the goal of extending banking and other financial services to this vast “unbanked” population, we need to consider not only such product innovations as microfinance and mobile banking but also issues of data accuracy, impact assessment, risk mitigation, technology adaptation, financial literacy, and local context. In Banking the World, experts take up these topics, reporting on new research that will guide both policy makers and scholars in a broader push to extend financial markets.

The contributors consider such topics as the complexity of surveying people about their use of financial services; evidence of the impact of financial services on income; the occasional negative effects of financial services on poor households, including disincentives to work and overindebtedness; and tools for improving access such as nontraditional credit scores, financial incentives for banking, and identification technologies that can dramatically reduce loan default rates.

Performance Measurement and Evaluation Systems: Institutionalizing Accountability for Governmental Results in Latin America

Performance Measurement and Evaluation Systems: Institutionalizing Accountability for Governmental Results in Latin America
In S. Kushner & E. Rotondo (Eds.), Evaluation voices from Latin America. New Directions for Evaluation, 134, 77–91.

Cunill-Grau, N., & Ospina, S. M.
06/08/2012

Results-based performance measurement and evaluation (PME) systems are part of a global current in public administration. In the Latin American context, this trend is also a reflection of the broader processes of reform of the latter half of the 20th century, including the modernization of public administration, as well as broad processes of decentralization and democratization, both of which are dimensions of development in Latin America, regardless of the political and ideological orientation of specific governments. This chapter documents the development of such evaluative approaches to organizational quality and raises some issues for further discussion.

Behavioral Foundations of Microcredit: Experimental and Survey Evidence from Rural India

Behavioral Foundations of Microcredit: Experimental and Survey Evidence from Rural India
American Economic Review 102 (2), April 2012: 1118-1139.

Bauer, Michal; Julie Chytilová; and Jonathan Morduch
04/01/2012

We use experimental measures of time discounting and risk aversion for villagers in south India to highlight behavioral features of microcredit, a financial tool designed to reduce poverty and fix credit market imperfections. The evidence suggests that microcredit contracts may do more than reduce moral hazard and adverse selection by imposing new forms of discipline on borrowers. We find that, conditional on borrowing from any source, women with present-biased preferences are more likely than others to borrow through microcredit institutions. Another particular contribution of microcredit may thus be to provide helpful structure for borrowers seeking self-discipline.

Do interest rates matter? Credit demand in the Dhaka Slums

Do interest rates matter? Credit demand in the Dhaka Slums
Journal of Development Economics, 97(2): 437-449

Dehejia, Rajeev; Heather Montgomery and Jonathan Morduch
03/01/2012

“Best practice” in microfinance holds that interest rates should be set at profit-making levels, based on the belief that even poor customers favor access to finance over low fees.  Despite this core belief, little direct evidence exists on the price elasticity of credit demand in poor communities.  We examine increases in the interest rate on microfinance loans in the slums of Dhaka, Bangladesh.  Using unanticipated between-branch variation in prices, we estimate interest elasticities from -0.73 to -1.04, with our preferred estimate being at the upper end of this range. Interest income earned from most borrowers fell, but interest income earned from the largest customers increased, generating overall profitability at the branch level. 

Notre façon de voir la pauvreté [How we see poverty]

Notre façon de voir la pauvreté [How we see poverty]
FACTS, Special Issue 4 (Lutte contre la pauvreté), January 2012: 14-19.

Jonathan Morduch
01/01/2012

How we think about poverty is colored by how we measure it. For economists, that often means seeing poverty through quantities measured in large, representative surveys. The surveys give a comprehensive view, but favor breadth over depth. Typical economic surveys are limited in their ability to tease out informal activity, and, while they capture yearly sums, they offer little about how the year was actually lived by families. Year-long financial diaries provide a complementary way of seeing poverty, with a focus on week by week choices and challenges. The result is a re-framing of poverty and its relationship to money, calling for greater attention to financial access and a broader notion of how finance matters.

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