Thorsten Beck, Maria Soledad Martinez Peria, Maurice Obstfeld, Andrea Presbitero, 12 April 2018

Research has shown that financial inclusion is closely linked to economic development and growth. However, more work is needed to establish the magnitude and channels of this effect and to pinpoint the types of financial services that have a stronger payoff without threatening financial stability. This column tackles these questions by presenting new evidence from a recent IMF-DFID conference on financial inclusion. It also suggests avenues for future research on the topic.

Pushkar Maitra, Sandip Mitra, Dilip Mookherjee, Alberto Motta, Sujata Visaria, 14 December 2016

Lack of access to credit in developing countries traps farmers in poverty. At the same time, there is a lack of evidence that microfinance raises the incomes of the poor while maintaining high repayment rates. Using a field experiment in West Bengal, this column argues that incentivising local intermediaries to select loan recipients improves both average income growth and crop yields compared to traditional microfinance. There is no evidence that this strategy lowers equity, although some disadvantaged groups performed better in the existing system.

Jean-Marie Baland, Rohini Somanathan, Lore Vandewalle, 07 February 2016

The benefits of microfinance are in the details. This column takes a look at commercial bank lending to Indian self-help groups – smaller, informal community-based groups – as a new and successful microfinance initiative. Different ways of thinking about getting credit to the poorest and most marginalised in society can work, but only if the institutions are properly geared up for their customers.

Orazio Attanasio, Britta Augsburg, Ralph De Haas, Emla Fitzsimons, Heike Harmgart, Costas Meghir, 17 June 2015

There have been intense debates on whether microfinance can lift people out of poverty. Summarising research across seven countries, this column argues that microcredit is a useful financial tool but not a powerful anti-poverty strategy. There are also no significant benefits in terms of education or female empowerment. Yet, microcredit does allow low-income households to better cope with risk and to enjoy greater flexibility in how they earn and spend money. 

Yves Zenou, 08 January 2015

Targeting key players in a network can have important effects due to multipliers arising from peer effects. This column argues that this is particularly true for crime –the success in reducing crime in Chicago was due to the targeting of 400 key players rather than spending resources on more general targets. Key-player policies in crime, education, R&D networks, financial networks, and diffusion of microfinance outperform other policies such as targeting the most active agents in a network.

Ralph De Haas, Orazio Attanasio, Britta Augsburg, Emla Fitzsimons, Heike Harmgart, 23 December 2011

Microfinance institutions across the world are moving from group lending to individual lending. Yet, there is not much rigorous evidence on the borrower impact of both types of microcredit to either support or challenge such a strategic shift. This column presents such evidence from a randomised field experiment in Mongolia.

Dean Karlan, 31 July 2009

Dean Karlan of Yale University talks to Romesh Vaitilingam about his research programme on microfinance, which uses experimental methodologies to examine what kinds of products work and why. They also discuss his work on ‘commitment contracts’, which people can use to try to modify their own behaviour. The interview was recorded at the American Economic Association meetings in San Francisco in January 2009.

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