Part of our mission at FAI is to frame policy and regulatory issues by synthesizing evidence from existing research and generating new evidence where it's lacking.
Authors: Jean Lee (World Bank), Mahreen Mahmud (Oxford), Jonathan Morduch (NYU), Saravana Ravindran (UCLA), and Abu Shonchoy (Florida International U.). Click here for a PDF of this blog post.
Within one week in March, the lockdowns ordered by South Asian governments to combat the COVID-19 pandemic dramatically reversed rural-to-urban migrant flows. Our team’s early analysis shows that migration patterns may help predict the location of COVID outbreaks.
Read MoreThanks to everyone who joined our April 10 faivLive webinar on Global Pandemic Meets Microfinance: Impact on Poor Households and What the Industry Needs to Do Now, on Friday April 10. Below you’ll find a list of resources shared by panelists and attendees during the call.
Read MoreTim 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 MoreThis edition of faiVLive brings together expert practitioners and researchers to discuss how we should be thinking about the impact of COVID-19 and pandemic control policies on poor households in developing countries, what policy interventions are plausible and possible, what role does microfinance have to play, and what needs to happen to enable the global microfinance industry to be useful now and six months from now.
Read More“This particular element is going to hit lower income people much more than higher income people,” says Jonathan Morduch, the executive director of NYU’s Financial Access Initiative. “They really have a double whammy—their incomes are being hit, and also the mechanism to help them is going to take longer.”
Source: Abby Vesoulis, Time Magazine, Published April 1, 2020.
Read MoreBy Tim Ogden and Greta Bull
This blog post was originally published on CGAP.org.
COVID-19 has unequivocally arrived in the developing world. Hundreds of cases have been reported across Latin America and South Asia, and now there are at least 30 countries in Sub-Saharan Africa reporting infections. South Africa and India both announced yesterday that they would go into lockdown for three weeks, and others may soon follow. With health-care systems ill-equipped to cope with a pandemic, there are many reasons to believe that the effects of the virus in these countries will be even more damaging than in the developed world, with higher mortality rates.
Read MoreBy Bill Bynum, Joyce Klein, and Tim Ogden.
This blog post was originally published on the Aspen Institute.org.
You’ve heard about how important small businesses are to the economy and the nation. You’ve heard various figures being proposed to help those small businesses: $300 Billion, $350 Billion, $500 Billion.
What you likely haven’t heard is who typically receives small business stimulus funds. Even with the vast figures being proposed those funds won’t reach the most vulnerable businesses or the most vulnerable communities. We know because we’ve seen it in the past.
Read MoreThis morning we spoke with Deborah Burand, Professor of Clinical Law and Co-Director of the Grunin Center for Law and Social Entrepreneurship at the NYU Law School. She has a wealth of knowledge on how to support MFIs and investors after an economic crisis.
She shared with us summaries of two papers that look back on 2009-10 when MFIs ran into trouble following the 2008 global financial crisis.
Read MoreIn a webinar on February 20, 2020, Tim Ogden, Managing Director of the Financial Access Initiative at NYU shared the latest insights on SME business training programs, with guest speaker David McKenzie, Lead Economist in the Development Research Group, Finance and Private Sector Development Unit at the World Bank. Tim and David discussed what we know about small business performance and productivity, the importance of management, and training impact evaluations--all essential for innovating SME training programs. This webinar was part of FAI’s new SME Insight Community, developed in collaboration with the Mastercard Center for Inclusive Growth.
Below are a list of the papers referenced during their conversation. You can download a PDF of this bibliography here.
Read MoreMicrocredit is a cheap intervention with modest but positive effects with a great deal of scope for evidence-based innovation that could materially improve impact.
Read MoreBRAC, the world’s largest development NGO, examines the limitations of Cost Benefit Analyses and how to improve research methodologies for more informed policy and investment decisions.
In the last ten years, we have seen a push from investors, foundations, governments and concerned citizens for better impact evaluations to prove which development programs work consistently across contexts, with sustained outcomes over time.
Thanks to the generosity of the Citi Foundation, the US Financial Diaries launched a blog and webinar series in partnership with Stanford Social Innovation Review. The series looks at the financial lives of working Americans and offer new insights for designing policies, programs, and products that can better meet their needs. Over the past month, there have been a number of exciting updates in the series...
Read MoreWe were glad when Mark Zuckerberg picked Portfolios of the Poor: How the World’s Poor Live on $2 a Day as one of his 23 picks for his book club, the Year of Reading...[but] Maddie Crum of the Huffington Post points out that there’s just one thing wrong with Zuckerberg’s list. Where are all the women?
Read MoreEllen Seidman, senior fellow at the Urban Institute, discusses the role of housing instability for the latest post in the The Hidden Financial Lives of America's Poor and Middle Class blog and webinar series. Seidman points out that even if regulation helps to preserve America's limited stock of affordable housing, household income fluctuations still present barriers to home ownership:
Income volatility can also impact the process of getting a mortgage. In addition to savings, lenders make mortgages based on a potential buyer’s income. Traditionally, borrowers must have two years of stable earnings, and the only income lenders take into account for underwriting is that of the borrower and co-borrower. When families have multiple earners (who may change over the course of a year—let alone the much longer term of a mortgage) whose income is variable, this can present serious difficulties.
Research from the US Financial Diaries provides evidence that income and expense volatility makes it difficult for households to build assets, including housing.
You can read Seidmans's complete post here and also register for the series' February 4th webinar, here.
For the latest post in the new SSIR blog and webinar series, The Hidden Financial Lives of America's Poor and Middle Class, assistant professor and author H. Luke Shaefer discusses the relationship between changing labor markets and income volatility. Shaefer points out that "the interaction between precarious work and an employment-based safety net is a big part of why we’ve seen a sharp uptick in the number of families" struggling to get by. Even when households do find work, it is often unpredictable or piecemeal. Research from the US Financial Diaries provides evidence that this growing income and expense volatility makes it difficult for households to build assets.
You can read Shaefer's complete post here and also register for the series' January 21st webinar, here.
Mobile money’s early adopters in Bangladesh are much like those who first take up many emerging technologies worldwide - literate urban males who are above the poverty line. Mobile money’s promise, however, lies in its potential to deliver financial services cheaply and easily to groups who traditionally have less access to formal financial tools including women and the poor.
Read MoreThanks to the generosity of the Citi Foundation, the US Financial Diaries is proud to announce a blog and webinar series in partnership with Stanford Social Innovation Review. The series will look at the financial lives of working Americans and offer new insights for designing policies, programs, and products that can better meet their needs.
The first blog post focuses on how the financial lives of Americans have changed in the past 30 years and why the programs, policies, and products designed to help them need to change too. The second post discusses why growing income and expense volatility make it difficult for households to build assets, even with relatively high savings rates.
You can read both blog posts, and register for January 21st webinar, here.
Although micro-credit has been perceived as effective in reducing poverty, in reality, its impact has been modest. One reason could be that most microloans extended to the poor are term loans, which are not well-suited for borrowers with variable or risky income streams, for example, traders needing working capital for purchasing inventory, or farmers who earn lump-sum income after harvest. While the Indian government has been encouraging banks to provide credit in the form of over-draft, term loans continue to remain the predominant credit product.
In 2013, the Rural Financial Institutions Programme represented by GIZ and the National Bank for Agriculture and Rural Development (NABARD), partnered with Mann Deshi Mahila Bank to launch a new overdraft facility serviced through banking agents to traders and farmers selling groceries in rural markets in Maharashtra, India.
Read MoreFrom all of us at FAI, we would like to thank you for your ongoing engagement and support of
our work. Our team wishes you a happy holiday season and a wonderful new year!
The irresistible force of commitment savings met its immovable object. In every pilot, the products rarely moved off the shelf, and when they did, it was for reasons other than the value of the product itself.
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