Poverty

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.

Credit is Not a Right

Credit is Not a Right

Gershman, John and Jonathan Morduch.
01/01/2011

Is credit a human right? Muhammad Yunus, the most visible leader of a global movement to provide microcredit to world’s poor, says it should be. NYU’s John Gershman and FAI’s Jonathan Morduch disagree. In their new paper, Credit is Not a Right, they ask whether a rights-based approach to microcredit will in fact be effective in making quality, affordable credit more available to poor families – and, more importantly, whether it is a constructive step in terms of the broader goal of global poverty reduction. Jonathan Morduch argues his case in this video.

Borrowing to Save

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

Jonathan Morduch
12/01/2010

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.

Income and Poverty in Communities of Color

Income and Poverty in Communities of Color

Women of Color Policy Network
09/01/2010

The U.S. Census Bureau’s recent statistics on income highlight the need for increased social supports for working families, the allocation of additional funds to create quality jobs with good wages, and the development of bold and targeted policies to help individuals and groups disproportionately impacted by the recession recover.

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