Income characteristics and the use of microfinance services: evidence from economically active persons with disabilities

Abstract

The purpose of this empirical research from Uganda is to provide initial insight into the 'black box' of understanding the economic behaviour of persons with disabilities and about their use of microfinance services. First, we analyse the income levels of persons with disabilities in relation to their sources of income. Second, we study the income sources and income levels for different types of disabilities. Finally, we analyse how income level and income source relate to the use of microfinance services for persons with disabilities. We present evidence that farmers with disabilities and persons with visual impairments have lower income levels than other persons with disabilities. We then document that those with the lowest income levels have the least access to microfinance services, in particular services from formal institutions. Moreover, respondents involved in farming and manufacturing have less access to formal microfinance services than those involved in retail/wholesale or service activities.

The Commercialization of the Microfinance Industry: Is There a ‘Personal Mission Drift’ Among Credit Officers?

“…After omitting the outliers, the proportion of disabled clients decreases to less than 1%. Nonetheless, this share is higher than those in most MFIs because most MFIs rarely have any disabled clients in their portfolios (Beisland and Mersland, 2014b). With the exception of the few outliers regarding the proportion of disabled clients, no other data points have been disregarded in the analyses.…”

“…We use three proxy variables for 'poorer clients': the proportion of small loans in a given portfolio (Hermes et al, 2011;Mersland and Strøm, 2010); the proportion of young clients (Aubert et al, 2009); and the proportion of clients with disabilities (Beisland and Mersland, 2014b). Some Ecuadorian statistics illustrate the heightened vulnerability of the young and the disabled population: 19% of Ecuador's population is between 15 and 24 years old (Ecuador, 2013), which is considerably higher than the OECD average of 12% (stats.oecd.org).…”

Motivations for Business Start‐up: Are There any Differences Between Disabled and Non‐disabled Microfinance Clients?

“…In addition to the design of special incentives for credit officers' inclusion of PWDs in their portfolios (Labie, Meon, & Mersland, ), we believe well‐structured funds to guarantee PWDs' repayment of loans could be assessed. Targeted marketing efforts may also be effective (Beisland & Mersland, ). It is important, however, to remember that microcredit might put a person in a worse position if he or she does not have sufficient repayment capacity.…”

“…Thus, what we actually compare is whether there are differences in start‐up motivation between disabled and non‐disabled customers of a microbank. Microfinance has been criticized for not reaching the most vulnerable groups in society, for instance PWDs (Beisland & Mersland, ), and in the scarce research on PWDs' access to microfinance that exists, it is suggested that those PWDs that actually are able to access microfinance services may be remarkably similar to other clients (Nuwagaba et al, ; Beisland & Mersland, ). Therefore, for this sub‐group, one may not observe any differences when comparing PWDs' motivations for business start‐up with those of others.…”

Staff characteristics and the exclusion of persons with disabilities: evidence from the microfinance industry in Uganda

“…An abundance of research suggests that persons with disabilities frequently are discriminated against (for example, Barnes and Oliver 1995), which often means that these persons are among the poorest and most vulnerable members of society (Beisland and Mersland 2014); among those who live on less than $1 a day, one in five claims to have a disability (United Nations 2007). Microfinance -financial services tailored for poor people and their microenterprises -is an arena that often excludes persons with disabilities (Cramm and Finkenflugel 2008).…”