Poverty

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. 

The 2013 Federal Budget's Impact on Communities of Color and Low-Income Families

The 2013 Federal Budget's Impact on Communities of Color and Low-Income Families

Women of Color Policy Network
02/23/2012

The Obama administration's budget proposal for fiscal year 2013 (FY 2013) strengthens the national economy by investing in schools, communities and safety net programs. The FY 2013 budget also includes a number of important investments in infrastructure that will spur much needed job growth in a time of economic uncertainty for many working and low-income families. It is critical that such investments take into account the persistently high unemployment in communities of color, and target spending to increase the economic security of the communities most impacted by the "Great Recession." Additionally, the budget includes important changes to the tax code that will lay the foundation for a fairer and more equitable economy.

Above Board: Raising the Standards for Passenger Service Workers at the Nation's Busiest Airports

Above Board: Raising the Standards for Passenger Service Workers at the Nation's Busiest Airports

Mason, C. Nicole & Garcia, Lisette
02/01/2012

I n the fall of 2011, the Women of Color Policy Network at New York University's Robert F. Wagner Graduate School of Public Service conducted a survey of over 300 passenger service workers at the region's three major airports: LaGuardia, Kennedy International and Newark Liberty International.
Only workers contracted by the airlines were surveyed. This report focuses on the impact of the low-bid
contracting system on passenger service workers at the airports. It also proposes ways forward and concrete recommendations to raise job quality and performance standards for companies contracted directly with airlines.

“Waiting for the white man to change things”: Rebuilding Black poverty in New Orleans

“Waiting for the white man to change things”: Rebuilding Black poverty in New Orleans
Journal of Sociology & Social Welfare, 39(1), 111 – 139.

Hawkins, R. L. & Maurer, K.
01/01/2012

This paper revisits William Julius Wilson’s thesis that class has surpassed race in significance of impact on African Americans. Our study uses qualitative data from a three-year ethnographic study of 40 largely low-income families in New Orleans following Hurricane Katrina. We also include a review of the recent U.S. Census study assessing New Orleans’s current economic state. Participants in our study viewed race and class as major factors in four areas: (1) immediately following the devastation; (2) during relocation to other communities; (3) during the rebuilding process; and (4) historically and structurally throughout New Orleans. Our analysis concludes that racism is still a major factor in the lives of people of color. Further, for the poorest African Americans, race and class are inextricably linked and function as a structural barrier to accessing wealth, resources, and opportunities. The results have been a reproduction of the economic disparities that have historically plagued New Orleans.

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.

Why Finance Matters

Why Finance Matters
Science, vol. 332, 10 June 2011: 1271-1272.

Jonathan Morduch
06/01/2011

Roughly one-half of the world’s adults, about 2.5 billion people, have neither a bank account nor access to semiformal financial services such as “microcredit,” the growing practice in developing nations of providing small loans, typically less than US$500, to self-employed people. But what if they did? Muhammad Yunus, the 2006 Nobel Peace Prize winner and founder of Bangladesh’s Grameen Bank, a pioneering microcredit institution, argues that this lack of financial access means that the poor, especially poor women, can’t obtain the loans they need to build their businesses and get on a path out of poverty. The idea has taken hold: In 2009, for instance, Grameen Bank served 8 million customers; its average loan balance was just $127. Worldwide, microcredit advocates now claim more than 190 million customers. Proof of concept, however, is not proof of impact. Recent studies have found that some efforts to provide small loans have produced surprisingly weak results, and in this issue, Karlan and Zinman provide more evidence that we need to rethink microcredit. Their findings, from a randomized evaluation of microcredit lending in the Philippines, adds to a handful of recent results that suggest that microcredit’s effectiveness has been overstated by studies that selectively focus on success stories.

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.
04/08/2011

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.

The Supplemental Poverty Measure and Communities of Color

The Supplemental Poverty Measure and Communities of Color

Women of Color Policy Network
03/01/2011

With nearly 44 million individuals living in poverty, including 24 million people of color, the anticipated publication of the Supplemental Poverty Measure in the fall of 2011 provides an opportunity to review our nation's progress towards poverty alleviation and collaboratively strategize ways to ensure that anti-poverty efforts are inclusive of the most vulnerable segments of society. This policy brief explains how the new measure will help policymakers, researchers, and advocates better understand the breadth and depth of poverty's impact on communities of color.

The Impact of Recent Budget Proposals on Women of Color, Their Families, and Communities

The Impact of Recent Budget Proposals on Women of Color, Their Families, and Communities

Women of Color Policy Network
02/01/2011

The House and Presidential budget proposals released in February of 2011 include plans to reduce or eliminate funding to key programs that assist low-income families and communities of color. This policy brief highlights the detrimental impact of the proposed social spending cuts and emphasizes the need to invest in the long-term economic security of women of color, their families, and communities.

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