Editor's Note: Let's kick-off with a couple of public service announcements: The Household Finance Research Initiative at Dvara Research has a call for research proposals on household finance in India that is due on the 31st. The "tracks" are applied data science and primary research and there are 10 total grants available. Apply!
In the US, the Mastercard Center for Inclusive Growth, the Gates Foundation and the Walmart Foundation also have a new RFP for research projects focused on "stabilizing workers during the Covid-19 crisis and offer pathways for longer-term economic security and mobility." For the first time ever, the BREAD conference on Development Economics will be live streamed. It's today and tomorrow at 11am Eastern. Here's the link for today, and the one for tomorrow. This morning Emma Riley will be presenting her work on providing microcredit to women business owners via mobile money accounts; others are on "Rationing the Commons" and "Manipulation Proof Machine Learning." Tomorrow, Morgan Hardy will present her paper with Gisella Kagy and Lena Song on bargaining behavior among microentrepreneurs, followed by papers on state capacity and taxation; and inequality and place-based policy.
—Tim Ogden
Read MoreBy Michelle Kempis and Jonathan Morduch
As the current pandemic pushes the global economy to the brink, we decided to take a look at what surveys say about how well households plan to deal with big emergencies.
The only truly global data we know are from the World Bank’s Global Findex survey. The Findex reports on household surveys from 140 countries, and it greatly enriches what we know about financial inclusion. One section is devoted to asking how respondents would cover a large emergency equivalent to 1/20th GNI of per capita. It’s an under-exploited resource—but see this and this —and a bit tricky to interpret.
Read MoreAt 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 MoreEditor's Note: I recently learned that my paper with Michael Clemens (that one I referred to last week that took 5 years from submission to publication) on rethinking migration from the perspective of household finance is among the top 10% of downloads at Development Policy Review so if you're eager to read something non-pandemic check it out. Apparently at least a few other people have done so. And the paper on what is happening with microcredit in Pakistan is now officially published.
–Tim Ogden
Read MoreEvery crisis carries its own signature, unfolding with distinctive timing, impact and, ultimately, recovery. Floods have a short, sharp impact, and recovery begins as soon as the waters recede. Other crises, like the 2009 global financial meltdown, linger for years.
For the novel coronavirus, many epidemiologists predict a series of waves for the next year or so, with lockdowns beating back the virus only to have it flare up again when those measures are eased. As policymakers with limited information struggle to find the right balance between the health of people and the health of the economy (while also working to keep themselves in power), we can expect a juddering mix of policy-induced economic slowdowns that could go on for months – if not longer.
Read MoreEditor's Note: In the last faiV I noted that the question "How are you?" didn't seem like it could survive the pandemic. Here's an article from The Atlantic on some alternatives. But my favorite alternative so far is a different answer rather than question. Hans Dieter Seibel passed on that his colleague Marion Levy Jr. has a standard response to "How are you?" that seems especially apposite now: "Terrible. But I'm glad you asked."
Read MoreWe’re pleased to announce that Elisabeth Rhyne will be joining FAI as a visiting fellow. Former managing director of the Center for Financial Inclusion and a co-founder of the Smart Campaign, Elisabeth will focus on the issue of consumer protection, especially during the COVID-19 pandemic and its aftermath.
Read Moreby Dave Grace and Elisabeth Rhyne
During the economic slowdown in response to the novel coronavirus, the position of financial institutions is in some ways analogous to that of medical workers fighting the virus—without the health risk. Financial institutions have a duty to help their clients, even though doing so exposes them to increased risk. This is especially true for microfinance institutions, financial cooperatives and other bankers who serve lower income and vulnerable people. For these providers, taking steps to help customers like forgiving loans or offering payment holidays potentially threatens their own survival. Financial institutions are asked to support their small business and household customers through this unprecedented situation, even while their own solvency is challenged.
Read MoreAuthors: 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 MoreThis edition of faiVLive brought 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 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 MoreEditor's Note: The only two predictions I feel I confident in making right now are that a) we will find some new phrase for opening a conversation other than "How are you?" or at least some new way to answer the question, and b) that the trend of putting webcams on the bottom of a laptop screen is over. Thanks to all of you who reached out in reaction to the abbreviated version of the faiV last week focused on my concerns about the future of microfinance in the US and globally. Please keep sending information and thoughts my way.
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 MoreEditor’s Note: What a difference a month makes. I've started drafting a new edition of the faiV several times over the last six weeks, but events kept overwhelming the moment and I put it off again. Now it seems that events have overwhelmed everything. And so, here is a special edition of the faiV with few links and only two thoughts around one central theme: the existential crisis for microfinance globally.
Read More
Ten years ago, FAI managing director Tim Ogden published Experimental Conversations, a collection of interviews with economists and other people who critique, promote, and use randomized controlled trials (RCTs) in development economics. One of the interviewees was Michael Kremer, a pioneer of the movement, now a Nobel laureate, and recently appointed Chief Economist of the World Bank.