This study extends research on the social performance of microfinance institutions. The research methodology is based on Grameen Progress out of Poverty Index™ (PPI™) for Cambodia applied to a sample of borrowers randomly extracted from a Cambodian microfinance institution's loan portfolio. Dataset has been directly collected through in-house interviews. Main questions discussed here are: (1) Is microcredit targeted to poor people? (2) Has the poverty rate of the sample changed in last six months? and (3) What percentage of male vs. female clients is poor? We found an average poverty likelihood of about 8.1%, estimated at the day of the interview, steady over a period of six months and not statistically different between male and female borrowers. This evidence might be related to business geographical location or targeting. Actually, PPI too much relies on asset ownership rather than on cash flows and saving capacity. Despite the general wisdom microcredit is targeted to the "poorest among the poor people", this is utterly consistent with a sound and safe (micro)banking activity, aimed at sustainable results.Here comes a call for a triple bottom line performance evaluation on microfinance institutions: economic, social and environmental effects of their activities.
The adoption of a single currency in Europe is a pure political project. What we have learned from Greek crisis is that being in the Eurozone means that creditors can destroy a national economy and seize public assets if the government steps out of line. To keep the European project alive, we here call for a fundamental reform on sovereign debt: switching from a goal to which policy is constrained, back to a tool to serve policy aims. In a distressed country, lenders has the power to forces the borrower to accept and to adopt restrictive spending policies that defend their interest at the expense of citizen’s ones. Eventually, this leads inevitably to the loss of autonomy in borrower’s decisions on fiscal policy, spending policy, public properties. If the cause for this degenerative process is the privilege on sovereign debt, then we need to find a new framework that reclassifies the public debt as functional to human development rather than individual profits. A country shall not be allowed to repay a debt that goes beyond its repayment capacity. The maximum payback capacity shall be settled before the credit is granted as a fraction of its primary balance. As such, the amount of primary balance not pledged to the repayment of the debt shall be always available to the government to undertake investments, social or security expenses and to face unexpected events. If this rule were implemented, the capital market would be automatically regulated: the debt that exceeds that threshold would be automatically written-off.
Corporate finance management rules are written under the assumption that financing costs are fully deductible from taxable income. If this assumption is relaxed, such rules need to be revised. We review traditional management tools and propose a new set of guidelines for financial management. The tax reform introduced in Italy, which creates a partial tax deduction for financing costs, offers a case study to measure the impact of such rules on a firm's profitability. The general wisdom among academics and practitioners was of a further pressure on economic performance of firms due to a higher tax burden. Is this concern effective? Do Italian firms pay more taxes in the following years? We checked the effect of the new rules on a sample of 2,025 large Italian firms. We did not find a deep impact. Effects are limited to one sector, characterized by operating profitability on sample mean and financial leverage below sample mean. Policy makers are now advised to fine-tune this regulation or to abandon it.
In late 2009, a foreign institutional investor initiated a search for investment opportunities within the Italian photovoltaic industry. The profile of the investor was a very large long-term asset manager seeking uncorrelated returns from alternative energy-related opportunities. The investor was encouraged to look into the Italian arena due to past experience in Italian infrastructure investments and the relative attractiveness of the Italian incentive structure versus other regions.
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