The Gender of Finance and Lessons for Microfinance

Guérin, Isabelle

doi:10.1142/9789814295666_0027

Cited by 11 publications

(11 citation statements)

References 35 publications

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“…Moreover, if group members have known each other for a long time, they may be reluctant to check up on and sanction each other. The results of Godquin (2004), Ahlin and Townsend (2007), and confirm the 6 Gender may also influence repayment performance through other channels (Guerin, 2011). Agier and Szafarz (2012) show that gender is a source of discrimination in loan granting.…”

Section: Social Capital In Microfinance: a Brief Review Of The Literamentioning

confidence: 60%

Defining Social Collateral in Microfinance Group Lending

Postelnicu¹,

Hermes²,

Szafarz³

2014

Microfinance Institutions

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Microfinance group lending with joint liability allows asset-poor individuals to replace physical collateral by social collateral. The literature on microfinance lacks a rigid framework for analyzing the consequences of using social collateral for borrowing behavior and repayment. This paper fills the gap by providing a theoretical framework to evaluate the impact of social collateral pledged by group borrowers on group lending repayment. Our approach is novel as we take into account the external ties of group borrowers, i.e. the social ties linking borrowers to non-borrowers from their community, whereas previous work in this field has looked solely at internal ties (i.e. between group members). One of the important features of our model is that we stress the impact of network configuration on the amount of social collateral pledged. Our model shows why the group lending methodology works better in rural areas than in urban areas, namely because rural social networks are typically denser than urban ones, which results in higher social collateral. AbstractMicrofinance group lending with joint liability allows asset-poor individuals to replace physical collateral by social collateral. The literature on microfinance lacks a rigid framework for analyzing the consequences of using social collateral for borrowing behavior and repayment. This paper fills the gap by providing a theoretical framework to evaluate the impact of social collateral pledged by group borrowers on group lending repayment. Our approach is novel as we take into account the external ties of group borrowers, i.e. the social ties linking borrowers to non-borrowers from their community, whereas previous work in this field has looked solely at internal ties (i.e. between group members). One of the important features of our model is that we stress the impact of network configuration on the amount of social collateral pledged. Our model shows why the group lending methodology works better in rural areas than in urban areas, namely because rural social networks are typically denser than urban ones, which results in higher social collateral.

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Section: Social Capital In Microfinance: a Brief Review Of The Literamentioning

confidence: 60%

Defining Social Collateral in Microfinance Group Lending

Postelnicu¹,

Hermes²,

Szafarz³

2014

Microfinance Institutions

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“…1 While this juggling of multiple loans by poor women has been well documented (Johnson, 2004;Guérin, 2011), research so far has only focussed on examining the impact of formal lending on women's empowerment. Even within formal lending, the focus has mainly been on studying the impact of microfinance.…”

Section: Introductionmentioning

confidence: 99%

“…Part of the answer lies in the way financial responsibilities are divided within households. Irrespectively of the diversity and complexity of financial arrangements, intra-household financial responsibilities are generally divided along the gender lines (Dwyer and Bruce, 1988;Kabeer, 1994;Johnson, 2004;Guérin, 2011).…”

Section: Introductionmentioning

confidence: 99%

“…Men and women also operate their own financial circuits and borrow from different sources for different purposes (Johnson, 2004;Guérin, 2011;Agier et al, 2013). Men are typically in charge of asset management while women take care of expenditures in household provisioning, children's health and education (Thomas, 1990;Senauer, 1990;Schultz, 2001; 4 Duflo, 2003;Chant, 2007;Garikipati, 2009).…”

Section: Introductionmentioning

confidence: 99%

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The Cost of Empowerment: Multiple Sources of Women’s Debt in Rural India

Garikipati

Agier

Guérin

et al. 2016

The Journal of Development Studies

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“…Since a large proportion of loan applicants in our database are immigrants, we could use their names to detect discrimination based on race and/or ethnicity. 23 The success of the worldwide microcredit industry is at least partly attributable to its focus on poor female entrepreneurs who desperately need funds to launch their businesses (Garikipati, 2008;Guérin, 2011). It is therefore important to avoid introducing regulations that can counteract the women's empowerment efforts made by MFIs.…”

Section: Resultsmentioning

confidence: 99%

Gender Biases in Bank Lending: Lessons from Microcredit in France

Cozarenco

Szafarz

2015

J Bus Ethics

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The evidence on gender discrimination in lending remains controversial. To capture gender biases in banks' loan allocations, we observe the impact on the applicants of a microfinance institution (MFI) and exploit the natural experiment of a regulatory change imposing a strict EUR 10,000 loan ceiling on microcredit. Descriptive statistics indicate that the presence of the ceiling is associated both with bank-MFI co-financing and with harsher treatment of female borrowers. To investigate causal links, we develop an econometric approach that addresses the concerns of selection biases, multicollinearity, and endogeneity. Our empirical findings suggest that the change in the MFI's gender-related attitude was triggered by banks through co-financing. Hence, we speculate that co-financing pushes ceiling-constrained MFIs to import whatever biases in loan granting that the banks are prone to. Overall, this paper stresses that apparently benign regulations such as loan ceilings can significantly harm the women's empowerment efforts made by MFIs.

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The Gender of Finance and Lessons for Microfinance

Cited by 11 publications

References 35 publications

Defining Social Collateral in Microfinance Group Lending

Defining Social Collateral in Microfinance Group Lending

The Cost of Empowerment: Multiple Sources of Women’s Debt in Rural India

Gender Biases in Bank Lending: Lessons from Microcredit in France

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