International Development

Microfinance and Social Investment

Microfinance and Social Investment
Annual Review of Financial Economics, vol. 3, ed. Robert Merton and Andrew Lo. 2011: 407-434.

Conning, J. & Morduch, J.

This paper puts a corporate finance lens on microfinance.  Microfinance aims to democratize global financial markets through new contracts, organizations, and technology. We explain the roles that government agencies and socially-minded investors play in supporting the entry and expansion of private intermediaries in the sector, and we disentangle debates about competing social and commercial firm goals. We frame the analysis with theory that explains why microfinance institutions serving lower-income communities charge high interest rates, face high costs, monitor customers relatively intensively, and have limited ability to lever assets. The analysis blurs traditional dividing lines between non-profits and for-profits and places focus on the relationship between target market, ownership rights and access to external capital.

Borrowing to Save

Borrowing to Save
Journal of Globalization and Development 102 (2), December 2010.

Jonathan Morduch

Poor families often borrow even when they have savings sufficient to cover the loan. The practice is costly relative to drawing down one’s own savings, and it seems particularly puzzling in poor communities.  The families themselves explain that it is easier to repay a moneylender than to “repay” oneself, an explanation in line with recent findings in behavioral economics.  In this context, high interest rates on loans can help instill discipline.  While workable, the mechanism is hardly optimal; options could be improved through access to a contractual saving device that helps savers rebuild assets after a major withdrawal.

Childhood Obesity: public health impact and policy responses

Childhood Obesity: public health impact and policy responses
"Global Perspectives on Childhood Obesity: Current Status, Consequences and Prevention" Debasis Bagchi, Editor. Sept-2010

Kersh, R. & Elbel, B.

Understanding the complex factors contributing to the growing childhood obesity epidemic is vital not only for the improved health of the world's future generations, but for the healthcare system. The impact of childhood obesity reaches beyond the individual family and into the public arenas of social systems and government policy and programs. Global Perspectives on Childhood Obesity explores these with an approach that considers the current state of childhood obesity around the world as well as future projections, the most highly cited factors contributing to childhood obesity, what it means for the future both for children and society, and suggestions for steps to address and potentially prevent childhood obesity.

Creative State: Forty Years of Migration and Development Policy in Morocco and Mexico

Creative State: Forty Years of Migration and Development Policy in Morocco and Mexico
Ithaca: Cornell University Press

Iskander, N.

At the turn of the twenty-first century, with the amount of money emigrants sent home soaring to new highs, governments around the world began searching for ways to capitalize on emigration for economic growth, and they looked to nations that already had policies in place. Morocco and Mexico featured prominently as sources of "best practices" in this area, with tailor-made financial instruments that brought migrants into the banking system, captured remittances for national development projects, fostered partnerships with emigrants for infrastructure design and provision, hosted transnational forums for development planning, and emboldened cross-border political lobbies.

In Creative State, Natasha Iskander chronicles how these innovative policies emerged and evolved over forty years. She reveals that the Moroccan and Mexican policies emulated as models of excellence were not initially devised to link emigration to development, but rather were deployed to strengthen both governments' domestic hold on power. The process of policy design, however, was so iterative and improvisational that neither the governments nor their migrant constituencies ever predicted, much less intended, the ways the new initiatives would gradually but fundamentally redefine nationhood, development, and citizenship. Morocco's and Mexico's experiences with migration and development policy demonstrate that far from being a prosaic institution resistant to change, the state can be a remarkable site of creativity, an essential but often overlooked component of good governance.


Microfinance Games

Microfinance Games
American Economic Journal: Applied Economics 2(3): 60-95, July 2010.

Gine, Xavier, Pamela Jakiela, Dean Karlan, and Jonathan Morduch

Microfinance banks use group-based lending contracts to strengthen borrowers' incentives for diligence, but the contracts are vulnerable to free-riding and collusion. We systematically unpack microfinance mechanisms through ten experimental games played in an experimental economics laboratory in urban Peru. Risk-taking broadly conforms to theoretical predictions, with dynamic incentives strongly reducing risk-taking even without group-based mechanisms. Group lending increases risk-taking, especially for risk-averse borrowers, but this is moderated when borrowers form their own groups. Group contracts benefit borrowers by creating implicit insurance against investment losses, but the costs are borne by other borrowers, especially the most risk averse. 

The Economics of Microfinance, 2nd edition

The Economics of Microfinance, 2nd edition
Cambridge, MA: MIT Press.

Beatriz Armendáriz and Jonathan Morduch


1 Rethinking Banking 

2 Why Intervene in Credit Markets? 

3 Roots of Microfinance: ROSCAs and Credit Cooperatives

4 Group Lending

5 Beyond Group Lending

6 Savings and Insurance

7 Gender

8 Commercialization and Regulation

9 Measuring Impacts

10 Subsidy and Sustainability

11 Managing Microfinance 

Selective Knowledge: Reporting Bias in Microfinance Data

Selective Knowledge: Reporting Bias in Microfinance Data
Perspectives on Global Development and Technology.

Morduch, J. & Bauchet, J.

Answering surveys is usually voluntary, yet much of our knowledge depends on the willingness of households and institutions to answer. In this study, we explore the implications of voluntary reporting on knowledge about microfinance. We show systematic biases in microfinance institutions' choices about which survey to respond to and which specific indicators to report. The analysis focuses on data for 2,072 microfinance institutions from MixMarket and the Microcredit Summit Campaign databases for the years 2004-2006. In general, we find that financial indicators are more often reported than social indicators. The patterns of reporting correlate with the institutions' region of operation, mission, and size. The patterns in turn affect analyses of key questions on trade-offs between financial and social goals in microfinance. For example, the relationship between operational self-sufficiency and the percentage of women borrowers is positive in the Microcredit Summit Campaign data but negative in the MixMarket data. The results highlight the conditional nature of our knowledge and the value of supporting social reporting.

Which Parts of Globalization Matter for Catch-Up Growth?

Which Parts of Globalization Matter for Catch-Up Growth?
American Economic Review, Vol. 100, No. 2, May 2010, 94-98.

Paul Romer

Economists devote too much attention to international flows of goods and services and not enough to international flows of ideas. Traditional trade flows are an imperfect substitute for flows of the underlying ideas. The simplest textbook trade model shows that a welfare-enhancing move toward freer flows of ideas should be associated with a reduction in conventional trade. The large quantitative effect from the flow of ideas is evident in the second half of the 20th century as the life expectancies in poor and rich countries began to converge. Another example comes from China, where authorities dramatically reduced accident rates by adopting rules of civil aviation that were developed in the United States. All economists, including trade economists, would be better equipped to talk about international flows of technologies and rules if they adopted a consistent vocabulary based on the concepts of nonrivalry and excludability. An analysis of the interaction between rules and technologies may help explain important puzzles such as why private firms have successfully diffused some technologies (mobile telephony) but not others (safe municipal water.)

Health Care in World Cities: New York, London and Paris

Health Care in World Cities: New York, London and Paris
Johns Hopkins University Press, April

Gusmano, M.K., Rodwin, V.G. & Weisz, D.

New York. London. Paris. Although these cities have similar sociodemographic characteristics, including income inequalities and ethic diversity, they have vastly different health systems and services. This book compares the three and considers lessons that can be applied to current and future debates about urban health care.

Highlighting the importance of a national policy for city health systems, the authors use well-established indicators and comparable data sources to shed light on urban health policy and practice. Their detailed comparison of the three city health systems and the national policy regimes in which they function provides information about access to health care in the developed world's largest cities.

The authors first review the current literature on comparative analysis of health systems and offer a brief overview of the public health infrastructure in each city. Later chapters illustrate how timely and appropriate disease prevention, primary care, and specialty health care services can help cities control such problems as premature mortality and heart disease.

In providing empirical comparisons of access to care in these three health systems, the authors refute inaccurate claims about health care outside of the United States.

Click here for a brief excerpt of the content.

Book review in Journal of Health Politics, Policy and Law.


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