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Group Lending with Heterogeneous Types by Li Gan,Manuel A. Hernandez,Yanyan Liu Pdf
Group lending has been widely adopted in the past thirty years by many microfinance institutions as a means to mitigate information asymmetries when delivering credit to the poor. This paper proposes an empirical method to address the potential omitted-variable problem resulting from unobserved group types when modeling the repayment behavior of group members. We estimate the model using a rich dataset from a group-lending program in India. The estimation results support our model specification and show the advantages of relying on a type-varying method when analyzing the probability of default of group members. In particular, our model helps to better understand the factors driving repayment behavior, which may differ across group types, and shows a higher predictive power than standard single-agent choice models.
Group Lending with Heterogeneous Types by Li Gan Pdf
This paper proposes and implements a mixture model to account for the unobserved group heterogeneity when modeling repayment behavior in group lending. We discuss the model properties and identification. We estimate the model using a rich dataset from a group lending program in India. The estimation results support the existence of two different group types: “responsible” and “irresponsible” groups. We find that the effects of the factors driving the repayment behavior differ across types. The model also shows a higher predictive performance than standard probabilistic models, particularly in identifying potential defaulters. We provide evidence supporting the robustness of the estimations.
The Social Economics of Poverty by Christopher B. Barrett Pdf
A unique analysis of the moral and social dimensions of microeconomic behaviour in developing countries, this book calls into question standard notions of rationality and many of the assumptions of neo-classical economics, and shows how these are inappropriate in communities with widespread disparity in incomes. This book will prove to be essential for students studying development economics.
Sustainability and Poverty Outreach in Microfinance: the Sri Lankan Experience by H Amarathunga Pdf
The fulfillment of the role of microfinance institutions (MFIs) in providing affordable financial services to the poor is associated with invariable challenges to MFIs, particularly in maintaining MFIs’ sustainability. The research work undertaken in this context to prepare author’s doctoral thesis has finally culminated in a book, which has comprehensively dealt with the subject of sustainability versus poverty outreach in microfinance. Overall, the results of panel data analysis confirm that there is no trade-off between sustainability and poverty outreach of MFIs. Thus, MFIs are in a position to achieve operational self-sufficiency while expanding services to the poor. Further, it is evident from logit analysis that group lending as against individual lending is strategically important for MFIs to achieve sustainability, successfully warding off the problems of asymmetric information prevailing in the rural credit markets. The book carries a detailed description on Sri Lanka’s financial sector and poverty aspects with special emphasis on microfinance sector which comprises of more than 15000 service providers under a variety of institutions with different mandates and business models. Policy discussion along with the findings of econometric analyses provides the reader with new insights especially in the absence of any other macro-level studies carried out to cover microfinance sector in Sri Lanka.
An Ex Ante Analysis of the Impact and Cost-Effectiveness of Biofortified High-Provitamin A and High-Iron Banana in Uganda by John L. Fiedler,Enoch M. Kikulwe,Ekin Birol Pdf
Uganda has made notable progress in reducing micronutrient deficiencies in recent years, but the prevalence of vitamin A deficiency (VAD) and anemia among children under 5 remain unacceptably high. According to World Health Organization criteria, VAD remains a public health problem in Uganda, and anemia is a severe problem. In this paper we explore the potential contribution to reducing both of these deficiencies using a genetically modified, highprovitamin A and high-iron banana (HPVAHIB) that is currently being developed. We present an ex ante analysis of the costs and nutritional benefits of HPVAHIB. Using the Ugandan National Household Survey of 2005/06, we analyzed the production and consumption patterns of highland cooking banana (nakinyika) and sweet banana (sukalindizi). Informed by the empirical findings, we developed geographically differentiated adoption, production, consumption, and diffusion patterns for several types of HPVAHIB. Based on households reported quantities of each type of banana currently consumed, we estimated the number of people consuming each banana and the quantities they consume, and then simulated the additional intakes of vitamin A and iron and estimated the number of disability-adjusted life years (DALYs) saved attributable to each. Combining the health impacts with the estimated costs of the project, three impact measures of the HPVAHIB are developed: the cost per DALY saved, the benefitcost ratio, and the internal rate of return. Eighteen scenarios are estimated. The base scenario, which includes only the biofortification of cooking banana with provitamin A at a level equal to 400 percent its intrinsic provitamin A content, estimates that the net present cost per DALY saved of HPVAHIB is US$62, its benefitcost ratio is 16, and its internal rate of return is 31 percent. According to criteria established by the World Health Organization and the World Bank, the HPVAHIB project is a very cost-effective health intervention.
Targeting Technology to Reduce Poverty and Conserve Resources by Travis J. Lybbert,Nicholas Magnan,David J. Spielman,Anil Bhargava,Kajal Gulati Pdf
Demand heterogeneity often makes it profitable for firms to price and promote goods and services differently in different market segments. When private consumption brings public benefits, this same heterogeneity can be used to target public subsidies. We explore the design of publicprivate targeting and segmentation strategies in the case of a resource-conserving agricultural technology in India. To understand farmers heterogeneous demand for laser land leveling (LLL), we conducted an experimental auction for LLL services with an integrated randomized controlled trial to estimate the private benefits of the technology. We use graphical and econometric approaches to characterize farmer demand for LLL. We then add detailed cost data from LLL providers to simulate and evaluate several potential targeted delivery strategies based on measures of (1) the cost-effectiveness of expanding LLL dissemination, (2) water savings, and (3) market surplus in a welfare framework. These simulations demonstrate inherent tradeoffs between increasing the amount of land that is leveled and expanding the number of farmers who adopt the technology, and between adoption and water savings. While segmenting and targeting are popular elements of many publicprivate partnerships to develop and disseminate agricultural technologies, formulating and implementing effective delivery strategies requires a rich understanding of costs, benefits, and demand. Our experimental approach generates such an understanding and may be relevant in other contexts.
Comprehensive Food Security and Vulnerability Analysis by Oluyemisi Kuku-Shittu,Astrid Mathiassen,Amit Wadhwa,Lucy Myles,Akeem Ajibola Pdf
The Nigerian Comprehensive Food Security and Vulnerability Analysis (CFSVA) provides an in-depth assessment of the food security situation within Nigeria. This is very important as it equips policymakers with timely and relevant information that will aid the targeting of interventions. Some of the most pertinent findings of the study are listed below: Food insecurity and poverty are intricately linked. Some 29 percent of households in the poorest wealth quintiles have unacceptable diets (9 percent poor and 20 percent borderline) compared with 15 percent in the wealthiest (2 percent poor and 13 percent borderline). The poorest livelihoods are found in agriculture. Seventy-seven percent of subsistence farmers are found in the two poorest wealth quintiles, as are 70 percent of mixed or cash crop farmers. The general state of water and sanitation facilities available to households in all wealth categories is very poor, with consequent health implications. Forty-five percent of respondents do not have access to decent toilets, and 85 percent have no proper means of refuse disposal. The vulnerable and food insecure are mostly found in rural areas and the North West and North East regions of Nigeria. Most households in all regions and at all wealth levels purchase food, but rural households and poorer households (by wealth and livelihood) also rely heavily on own food production. Households in the poorest quintiles in both rural and urban areas rely on own production (32 percent rural and 24 percent urban). Wealthier urban households rely mostly on purchases, whereas own production is common at varying levels across all wealth levels for rural households. Nigerians generally consume a starchy diet, but wealthier households can afford more nutrient-rich foods (including animal-based proteins) than poorer households. For instance, the wealthiest households consume meat, fish, and eggs an average of four days a week compared with only two days for the poorest households. Most households protect vulnerable household members in terms of food allocations (women and children), but that may not hold in the poorest households where some difficult allocation decisions may have to be made. Poorer households are more likely to engage in extreme coping strategies (like going a whole day without food) to deal with food shortages.
Dynamics of Transformation by Hiroyuki Takeshima,Kipo Jimah,Shashidhara Kolavalli,Xinshen Diao,Rebecca Lee Funk Pdf
Agriculture in African South of the Sahara (SSA) can be transformed if the right public support is provided at the initial stage, and it can sustain itself once the enabling environment is put in place. Successes are also specific to the location of projects. In Ghana, interesting insights are obtained from the successful Kpong Irrigation Project (KIP), contrasted with other major irrigation projects in the country. Through an exploratory review, we describe how a productive system evolved in KIP and how public support for critical aspects (accumulation of crop husbandry knowledge, selection and supply of profitable varieties, and mechanization of land preparation) might have created a productive environment that the private sector could enter and fill in the market for credit, processing, mechanization of harvesting, and other institutional voids that typically have constrained agricultural transformation in the rest of SSA. Slower progress in other projects also raises a number of questions. We conclude by summarizing those questions and some testable hypotheses for future research.
The Child Health Implications of Privatizing Africas Urban Water Supply by Katrina Kosec Pdf
Identifying policies which can improve water sector management is critically important given the global burden of water-related disease. Each year, 1 in 10 child deathsroughly 800,000 in totalis the direct result of diarrhea. Can private-sector participation (PSP) in the urban piped water sector improve child health? The author uses child-level data from 39 African countries during 19862010 to show that introducing PSP decreases diarrhea among urban dwelling children under five years of age by 5.6 percentage points, or 35 percent of its mean prevalence. PSP also leads to greater reliance on piped water. To attribute causality, the author exploits time variation in the private water market share controlled by African countries former colonizers. A placebo analysis reveals that PSP does not affect symptoms of respiratory illness in the same children, nor does it affect a rural control group unaffected by PSP.
Organizational and Institutional Issues in Climate Change Adaptation and Risk Management by Catherine Ragasa,Yan Sun,Elizabeth Bryan,Caroline Abate,Atlaw Alemu,Mahamadou Namori Keita Pdf
Climate change places demand on existing governance structures to reform and work more effectively than in the past. In response, greater attention to and funding for climate change adaptationincluding the efforts of National Adaptation Programmes of Action (NAPAs), the Least Developed Country Fund, the Special Climate Change Fund, the Adaptation Fund, and the E.U. Global Climate Change Allianceprovide an opportunity for institutional, organizational, and human-capacity strengthening. This study was conducted to explore the challenges and opportunities for building human, organizational, and institutional capacity for more effective climate change adaptation in developing countries. It is part of a larger research project titled Enhancing Womens Assets to Manage Risk under Climate Change: Potential for Group-Based Approaches, which is being conducted to help organizations better understand ways in which development projects can assist rural households in adapting to and managing the effects of climate change. This report provides some reflections and insights on the level of awareness, practices, and organizational and institutional issues being faced by countries as they adapt to climate change, based on interviews with 87 practitioners working in government agencies, local organizations, international organizations, and think thanks reporting involvement in climate change adaptation. Data were collected in Bangladesh, Ethiopia, Kenya, and Mali using both an e-survey platform and face-to-face interviews. Responses reveal active work within these organizations on climate change adaptation and emphasize their important role in the countries efforts to address and adapt to climate change. Responses also reveal strong awareness among these organizations of different aspects of climate change adaptation along the different stages in a climate change adaptation project cycle, which may be a reflection of the active discussions and awareness campaigns during NAPA development in these countries. However, despite the awareness and presence of national strategies and action plans, there seem to be no explicit and clearly defined policy and strategy within these organizations outlining their role in and contribution to the national and collective efforts and, more importantly, no explicit and measurable targets and monitoring and evaluation (M&E) system to track progress and outcomes over time. Reported capacity gaps can be grouped into two categories: training needs and institutional challenges. In many organizations, there is limited awareness of and emphasis on the need for participation of target groups and beneficiaries during design and planning of climate change adaptation projects. In addition, many respondents reported a need for greater attention to issues related to profitability, financial sustainability, and market access from climate change project design to M&E. Finally, respondents emphasized that climate change projects should pay greater attention to gender, social, political, and cultural issues in their design and implementation. Reflections of respondents also highlighted the need for organizational capacity strengthening for those local organizations working in and providing services to rural communities, and for promoting a culture of impact and M&E within these organizations, in addition to the reported training needs in climate change management and in gender and social analysis. While this report provides some insights, further empirical analyses are needed to discover more details on strategies that could help trigger mind-set and organizational culture change and to capture the complexity of organizational and institutional issues hindering climate change adaptation efforts that aim at reducing vulnerability and contributing to development outcomes.
The Logic of Adaptive Sequential Experimentation in Policy Design by Haipeng Xing,Xiaobo Zhang Pdf
Inspired by the wide adoption of rigorous randomized controlled trials (RCTs) in medical research, economists and other social scientists have increasingly used RCTs in their research. As researchers pick up projects amenable to the RCT methodology, they likely leave out important questions to which RCTs cannot be directly applied. As a result, RCTs have been criticized for the proclivity of addressing trivial questions. As a matter of fact, in medical research RCTs are an integral part of adaptive sequential experiment designa few steps must be taken to screen out drugs that have toxins and strong side effects before running any RCTs on humans. In this paper, we argue that economists can learn a great deal from the design principles implemented in medical research. We develop a theoretical model to show the logic of adaptive sequential experiment design in the presence of uncertainty over negative effects and discuss how to choose samples in a population to minimize the experiment cost. We also point out the applications of our proposed framework in the economic domain, such as economic reforms and new product design.
The Impact of Alternative Input Subsidy Exit Strategies on Malawis Maize Commodity Market by Mariam A. T. J. Mapila Pdf
This study has been conducted in order to generate evidence of the visibility of exit from farm input subsidies in an African context. The study simulates the impact of alternative exit strategies from Malawis farm input subsidy program on maize markets. The simulation is conducted using a multiequation partial equilibrium model of the national maize market, which is sequentially linked via a price-linkage equation to local rural maize markets. The model accounts for market imperfections prevailing in the country that arise from government price interventions. Findings show that some alternative exit strategies have negative and sustained impacts on maize yields, production, and acreage allocated to maize over the simulation period. Market prices rise steadily as a result of the implementation of different exit strategies. Despite higher maize prices, domestic maize consumption remains fairly stable, with a slow but increasing trend over the simulation period. Results further suggest that exit strategies that are coupled with improvements in agricultural extension services have the potential to offset the negative impacts of the removal or scaling down of agricultural input subsidies. The study findings demonstrate the difficulty of feasibly removing farm input subsidies. Study recommendations are therefore relevant for policymakers and development partners debating removal or implementation of farm input subsidies.
Demand for Weather Hedges in India by Ruth Vargas Hill,Miguel Robles,Francisco Ceballos Pdf
Income risk is substantial for farmers in developing countries. Formal insurance markets for this risk are poorly developed, and as a result there has been an increasing trend to sell weather hedges to smallholder farmers to manage their risk. This paper analyzes the demand for rainfall-based weather hedges among farmers in rural India. We explore the predictions of a standard expected utility theory framework on the nature of demand for such products, in particular testing whether demand behaves as predicted with respect to price, the basis of the hedge, and risk aversion using data from a randomized control trial in which price and basis risk was varied for a series of hedging products offered to farmers. We find that demand behaves as predicted, with demand falling with price and basis risk, and appearing hump-shaped in risk aversion. Second, we analyze understanding of and demand for hedging products over time, examining the impact of increased investments in training on hedging products as well as evidence for learning by doing among farmers. We find evidence that suggests that learning by doing is more effective at increasing both understanding and demand.
Cambodian Agriculture by Timothy S. Thomas,Tin Ponlok,Ros Bansok,Thanakvaro De Lopez,Cathy Chiang,Nang Phirun,Chhim Chhun Pdf
Cambodia has been identified as one of the most vulnerable countries to climate change, given the predicted changes in temperature and precipitation, the share of labor in agriculture, and the countrys low adaptive capacity due to widespread poverty. In this study, we use climate data from four general circulation models (GCMs) to evaluate the impact of climate change on agriculture in Cambodia by 2050. We used the Decision Support System for Agrotechnology Transfer crop modeling software to evaluate crop yields, first for the 19502000 period (actual climate) and then for the climates given by the four GCMs for 2050. We evaluated crop yields for eight different crops at 2,162 points in Cambodia, using a grid of 10-kilometer squares, for 2000 and 2050. For each crop, we searched for the best cultivar (variety) in each square, rather than assuming the same cultivar to be used in all locations. We also searched for the best planting month in each square. We explored potential gains from changing fertilizer levels and from using irrigation to compensate for rainfall changes. This analysis indicates that when practiced together, using improved cultivars better suited for the changing climate conditions and adjusting planting dates can lessen the impact of climate change on yields, including for both wet- and dry-season rice. In addition, the analysis shows that losses in yield due to climate change can be compensated forfor many cropsby increasing the availability of nitrogen in the soil. To provide context to the modeling analysis, a survey of 45 communes was conducted using focus group discussions to solicit information on agricultural practices. Questions were asked about fertilizer, irrigation, seeds, tillage, and pest management, as well as about natural disasters and how farmers respond. Key results indicate that in response to extreme weather, only 7 to 16 percent of farmers report changing crop variety and only 20 percent of farmers report changing planting dates. Since the modeling results indicate that adaptation to climate change by changing crop variety and planting dates will be critical in order to avoid yield losses over the next 40 years, it is recommended that farmers expand their capacity to adapt in this way. In addition, every commune reported using some type of chemical fertilizer; however, in a typical commune, only 50 percent of the farmers were using any chemical fertilizer. This indicates that there is room to increase the use of chemical fertilizers. Finally, focus group participants were asked to name the top three natural disasters of concern. Drought was the most cited, reported in 44 of the 45 communes (98 percent), while flooding was cited in 67 percent of the communes surveyed. Despite this, in fully 58 percent of the communes, farmers reported taking no action in response to floods. In response to drought, farmers reported switching to other crops in 16 percent of the communes, and changed planting dates in 19 percent, while only 7 percent of the communes reported no adaptation in farming practices. These findings indicate the need for intervention to help farmers deal with floods in particular, and to determine whether strategies for adapting to drought are the best suited to mitigate crop loss.
Population Density, Migration, and the Returns to Human Capital and Land by Yanyan Liu,Futoshi Yamauchi Pdf
Rapid population growth in many developing countries has raised concerns regarding food security and household welfare. To understand the consequences of population growth on in the general equilibrium setting, we examine the dynamics of population density and its impacts on household outcomes using panel data from Indonesia. More specifically we explicitly highlight the importance of migration to urban sectors in the analysis. Empirical results show that human capital in the household determines the effect of increased population density on per capita household consumption expenditure. The effect of population density is positive if the average educational attainment is high (above junior high school), while it is negative otherwise. On the other hand, farmers with larger holdings maintain their advantage in farming regardless of population density. The paper concludes with some potential lessons for African countries from Indonesias more successful rural development experiences.
