Last week FAI hosted a webinar on the Gender Profit Gap to talk about why women’s businesses are smaller, grow less, and earn less, than men’s businesses. Below, some reflections from the literature on what can be done to empower women entrepreneurs. . . .
Read MoreCash Flows vs Balance Sheets: How to Think about Short-term Savings
Last week’s edition of the faiVLive—co-presented with the Aspen Institute Financial Security Program—brought together researchers and practitioners to look at how low-income households use short-term savings, and what formal and informal financial tools and product features can help them achieve their savings goals. . . .
A short recap of some highlights follows, but if you missed the webinar, you can still watch it HERE. . . .
Read MoreHrishipara Diaries: How One Community in Bangladesh Has (So Far) Weathered the COVID-19 Storm
One member of the Hrishipara community, realizing the demand for fresh vegetables and faced with the collapse of his usual work, sets up an improvised vegetable market in late April, 2020. Photo credit: Kalimullah
At FAI we have begun convening conversations with a small group of researchers collecting high-frequency data on the financial lives of households and small businesses. All members of the group are managing, through modified survey techniques, to continue (or start) data collection during the COVID-19 pandemic and lockdowns. Data collection is frequent, in some cases daily, but at least once a month. Our goal is to get a sense of the reach and scope of these somewhat similar studies, while facilitating collaboration among researchers to learn from one another, for example on streamlining and improving survey questions, and analyzing and interpreting high frequency data gathered in these circumstances. We also aim to support the use of the very granular data that emerges from these projects, contextualizing or aggregating it, to contribute to more informed, pro-poor policies and services. . . .
Read MoreThe Truth about Training: What We Know about Training Programs for Small Businesses
Tim and David’s conversation focuses on the “big mystery” at the heart of the debate about training programs for micro, small, and medium enterprises (MSMEs). On one hand, we know that keeping a small business afloat in a constrained environment is extremely difficult and complex. We’ve also found that the types of skills taught in training programs—basic budgeting, marketing, record keeping, financial and inventory management—do matter for small firm profitability and growth. These facts should in theory create scope for huge business improvements as a result of training programs. So what’s the conundrum? These improvements are generally not detected in the research: David’s meta-analysis of 15 rigorous studies found no statistically significant impact of training on profitability or sales. . . .
Read MoreA Tale of Two Studies: Measuring Women’s Empowerment Then and Now
In what seems to me an unfortunate conflation, the literature on women’s empowerment frequently relies on the same characterization as pornography: “you have trouble defining it but you know it when you see it.” If “empowerment” is hard to define, it is even harder to measure. This is a problem for researchers trying to establish a clear causal relationship between microfinance interventions and better outcomes for women. . . .
In theory, microcredit could empower women through a number of different channels. For example, giving loans to women could increase their bargaining power within the family, and afford them greater control over household resources and decisions. The peer monitoring component of group-lending could provide protection against abuse, and deter domestic violence. Empirically, however, the picture is quite mixed . . . . . .
Read MoreA Word of Warning on Postal Banking
Not long ago on this blog, Julie Siwicki explored Senator Elizabeth Warren's controversial idea that post offices begin offering checking and savings accounts, small loans, and money transfers. Would underserved consumers would actually benefit from the plan? Would expanded financial services actually help the struggling post office turn a profit? With the proposal now before Congress, FAI's managing Director Tim Ogden spoke with Next City, a non-profit that covers leaders, policies and innovations in metropolitan regions, about what it would take for postal banking to meet the needs of the unbanked . . . . . .
Read MoreRecommended on Medium: Migration as a Strategy for Household Finance
As part of our ongoing effort to bring the worlds of research and practice closer together, we are experimenting with making academic work more readable and accessible by publishing and disseminating it in new formats. We’ve just released a paper by Michael Clemens and Tim Ogden on Medium, which we like so far for its clean, visually appealing, picture-heavy layout, and the way it allows readers to leave comments on specific paragraphs. Of course, in the world of the “3 minute read” this is admittedly a slightly longer haul. . . .
The paper proposes a fundamental reframing of the research agenda on remittances, payments and development. When a household’s choice to send a migrant abroad migration is seen as an investment in human capital, and the physical location of the migrant as an asset to be acquired, then remittances are properly viewed as returns on investment rather than windfall income. . . .
Here Michael and Tim illustrate why physical location should be viewed as an asset with an example from the ballet . . . . . .
Read MoreFish Oil : Heart Disease :: Microcredit : Women’s Empowerment?
A theme on the social science blogs these days is “everything we know is wrong.” . . .
The frequent citation of drug trials as the basis for sound social science experiments disguises an unsettling fact about medical research in general: it’s often statistically and causally naïve. Political scientist/economist Chris Blattman recently pointed to a piece documenting that a widely influential fish oil/heart disease study that had been used to sell millions of dollars of fish oil never directly measured heart disease in the population of interest. Emily Oster, an economist at the University of Chicago, is now writing regularly for data journalism site fivethirtyeight on the spurious correlations in a lot of medical research. But it’s not just a problem of medical research. “As I teach my students,” Blattman wrote, “the first thing you should say to yourself as you open every book or research paper is, ‘This is almost certainly wrong’…Welcome to science" . . . . . .
Read MoreQuiz: How Much Do You Really Know About Mobile Money?
Last month the Mobile Money for the Unbanked group at GSMA released their state of the industry report for 2013. They’ve been collecting data on mobile money since 2010 so a more complete picture of changes in the industry is starting to emerge, and this year for the first time they’ve added other mobile money products like insurance, credit and savings, which make up a growing piece of the mobile money pie. Though we try to keep up on what’s new in mobile money, some of the findings surprised us. . . .
We hear that people these days are into quizzes (admit it, you already know which Game of Thrones character you are). Now get out your pencil and paper to tally up your scores, and see how much you really know about the global mobile money industry . . . . . .
Read MoreWhat if all of Africa were as digital as Kenya?
In Kenya, 70 percent of long distance payments from one individual to another are made electronically. Seventy percent of payments from governments and businesses to individuals are also made electronically. From 2006 to 2009 when M-Pesa—the Kenyan mobile instrument for all these payments—was expanding, the total number of person-to-person electronic transactions shot up rapidly, by 215 percent. . . .
What would happen if the rest of Sub-Saharan Africa looked like Kenya? A just out from McKinsey, based on Gallup data funded by the Gates Foundation, looks into that future scenario. . . .
The focus of the report is the opportunity for potential payment providers to earn more revenue (estimated at 2 percent of transaction volume). Projections show revenues from electronic payments across the continent would grow 50 percent, to $15-$16 billion a year. This news comes with something of a puzzle. With the opportunity so large, why have most other countries not followed in Kenya’s footsteps? . . .
Read MoreWho needs payday loans?
There’s a nice post on payday loans by New School professor Lisa Servon on the New Yorker Currency blog this week. She tells the story of Azlinah Tambu, a single mother in Oakland, CA who took out a series of payday loans, knowing she wouldn’t be able to pay them back on time and will end up repaying far more than she borrows. There’s no question Tambu is as informed a consumer of these types of loans as you could find: she has worked as a teller for a payday lender. In relating Tambu’s struggle to repay, Servon makes two really important and related points. . . .
First, current debates focus too much on the need for regulation to curb the abusive practices of payday lenders rather than seeking to understand the financial lives and motives of the people taking out these loans, despite their high cost . . . . . .
Read MoreFAI's Greatest Blog Hits of 2013
We’ve crunched the numbers and compiled the list of FAI’s most viewed posts of last year: . . .
- What’s Next: Another Repayment Crisis? by Daniel Rozas
- FAI Video: A Conversation with Pascaline Dupas
- What’s Next? External Validity by Jonathan Morduch
- The Death and Life of Cash by Timothy Ogden
- FAI Video: Dean Karlan Discusses Commitment Savings Research
- Beyond Business: Rethinking Microfinance - Timothy Ogden and Jonathan Morduch in Foreign Policy
- What's Next: Five Factors – Beyond Mobile Money – that will make Financially-Inclusive G2P a Reality by Jamie Zimmerman
- "How Microfinance Really Works" - Jonathan Morduch in Milken Review
- Impact Evaluation of Compartamos Released by Alicia Brindisi
Tradition and Trust: Reflections on Barriers to Mobile Payments from the IMTFI Conference
How would you describe a savings account where your money is occasionally stolen, eaten by mice, or washed away by floods? Merchants in Dharavi, the largest slum in Asia, describe it as “safe.” . . .
That’s what Deepti KC and Mudita Tiwari found when they interviewed sellers, suppliers and buyers in Dharavi, home to 5,000 informal businesses that create goods worth more than 600 million dollars a year, in the heart of Mumbai. . . .
Far from being poor peddlers of trinkets, the sellers of Dharavi—particularly those who make relatively expensive leather goods—routinely move thousands of dollars in a single day. They have sophisticated financial lives, often including formal bank accounts, and many have smart phones. KC and Tiwari—like many researchers studying financial inclusion in the developing world—posit that increasing take up of digital transactions “is essential to achieving inclusive financial growth in India” . . . . . .
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