Microfinance and Moneylenders: Long-Run Effects of MFIs on Informal Credit Market in Bangladesh
No hay miniatura disponible
Fecha
Título de la revista
ISSN de la revista
Título del volumen
Editor
World Bank, Washington, D.C.
Resumen
Descripción
Using two surveys from Bangladesh, this paper provides evidence on the effects of microfinance competition on village moneylender interest rates and households' dependence on informal credit. The views among practitioners diverge sharply: proponents claim that competition of microfinance institutions reduces both the moneylender interest rate and households' reliance on informal credit, while the critics argue the opposite. Taking advantage of recent econometric approaches that address selection on unobservables without imposing standard exclusion restrictions, this paper finds that microfinance competition does not reduce moneylender interest rates, thus partially repudiating the proponents. The effects are heterogeneous; there is no perceptible effect at low levels of coverage, but when microfinance coverage is high enough, the moneylender interest rate increases significantly. In contrast, households' dependence on informal credit tends to go down after they become a member of a microfinance institution, which contradicts part of the critic's argument. The evidence is consistent with a model where microfinance institutions draw away better borrowers from the moneylender, and fixed costs are important in informal lending.
Palabras clave
Access to Finance, Access to markets, accounting, adverse selection, affiliates, aggregate demand, Agriculture, amount of loans, Asset Purchase, bank branch, bank loans, base year, benchmark, biases, BIDS, borrower, branch location, branch office, checks, client base, collateral, Competitive Markets, consumer price index, Credit Agencies, credit cooperatives, Credit Market, credit markets, credit programs, Credit Rationing, Credit System, credit transactions, debt, debt accumulation, Default Risk, demand for credit, developing countries, Development Economics, development policy, disbursement, donor funding, econometric analysis, econometrics, economic activities, economic conditions, Economic Development, Economic Statistics, economics, economies of scale, educated women, education level, employment, entrepreneurial ability, exclusion, Expenditure, extreme poverty, Federal Reserve, Financial Institutions, Financial Markets, financial sector reform, financial sustainability, fixed costs, fixed effect model, formal bank, formal banks, formal financial sector, government banks, government credit, government interventions, government policy, green revolution, high interest rate, high interest rates, household fixed effect, household fixed effects, Household Income, households, human capital, Human Resources, IDS, income variability, indebtedness, inefficiency, Informal Borrowing, Informal Credit, informal financiers, informal lenders, informal loan, informal loans, instrument, interest rate, interest rate data, interest rates, International Bank, investment projects, Labor Market, land ownership, land-poor households, landholders, landless household, landless households, loan, loan amount, loan amounts, loan demand, loan officer, loan officers, loan product, loan size, loan sizes, loans from friends, market segmentation, MARKET SHARE, market shares, maturity, Merchant, MFI, MFIs, Micro Finance, micro-credit, Microcredit, microenterprises, Microfinance, microfinance institution, microfinance institutions, money lender, moneylender, Moneylenders, moral hazard, outstanding loans, pool of borrowers, positive effects, poverty alleviation, productivity, public banks, public safety net, Public Subsidies, regional dummy, Regulatory Authority, repayment, repayment capacity, repayment rate, repayment rates, repayment schedule, repayment schedules, return, returns, risk aversion, risk premium, Risk Taking, rural banks, rural credit, rural credit market, rural credit markets, Rural Financial Markets, safety net, settlement, short-term consumption loans, sizes of loans, source of income, Sustainable Finance, transactions costs, undue influence, usury, usury laws, village, villages, Vulnerable Group, withdrawal