Still noble ten years after the Noble?

Transcription

1 Still noble ten years after the Noble? Matthias Lehnert 10th International Summer School on Social Banking Kinsale

2 Nobel PeacePrizefora banker! Oslo, 10. December 2006 Copyright The Norwegian Nobel Institute 2006 Fotos: Ken Opprann Nobel PeacePrizeawarded "for their efforts through microcredit to create economic and social development from below"

3 Meet the non-bankables Approx. 2 bnpeopledo not havea bankaccount 2014 worldbankfigures

4 Whynomorelendingtothepoor? On ne prête quraux riches.

5 The ingenuityofmicrocredit The innovation of people like Muhammad Yunus [ ] was not just the idea of lending to the poor at more reasonable rates. It was figuring out how to do it. Banerjee and Duflo 2011, 162

6 Fromhype Oct14th 2006 Peace Prize to Pioneer of Loans to Poor No Bank Would Touch Nobel Prize Winner Yunus Revered by Poor Banker to the worldrs poor wins Nobel peace prize rmicroloanr Father YunusIs Awarded Nobel Peace Prize Oct 14th 2006 Oct 14th 2006 Oct14th 2006 MacroCredit Oct 19th 2006

7 tohell Nov 17th 2010 India MicrocreditFaces Collapse From Defaults In India, microloans can trip up the poor Impoverished Indian families caught in deadly spiral of microfinance debt Indiars Major Crisis in Microlending Oct 31st 2010 Jan 31st 2011 Oct28th 2010 Microfinancein India: Discredited Nov 4th 2010

8 A smallthoughtexperiment Howwouldmylifelooklike if I hadnobankaccount? couldnot transfermoney? hadnoaccess tocredit? hadnoinsurance?

9 MeetEvelyn Businge Livesin a veryremote rural area in Western Uganda Income depends on agricultural harvests Small, volatile and inpredictable income Nosocial security Noinsurance Nobank account

10 Small businessforincomegeneration

11 Consumptionsmoothing JANUAR FEBRUAR MÄRZ APRIL MAI JUNI JULI AUGUST SEPTEMBER OKTOBER NOVEMBER DEZEMBER Einkommen Bedarf

12 Saving

13 anddissaving

14 Consumptionsmoothingchallenges

15 Interest rates From: Richard Rosenberg et al. (2013, p. 7)

16 Interest rates From: Richard Rosenberg et al. (2013, p. 21)

17 What drives interest rates? From: MFTransparency2014

18 What drivesinterestrates? From: Emmanuelle Javoy(2015, p. 6)

19 Howprofitable aremicroinvestments? Example fromindia INR INR INR Rupien INR INR Ertrag Kreditsumme INR INR INR 0 INR Basedon: Banerjee andduflo 2004

20 Howprofitable aremicroinvestments? Small holder farmersin Ghana: % Udry and Anagol(2006)

21 Howprofitable aremicroinvestments? Small tradersin rural Kenya: 113% Kremer et al (2007)

22 Howprofitable aremicroinvestments? Small tradersin Mexico: 20-30% per month McKenzie and Woodruff(2008)

23 What impact doesmicrocredit have? 1. Impact on the micro levelof the individual household 2. Impact on the mesolevelof a local community 3. Impact on the macro level of an entire economy

24 What impact doesmicrocredit have? Oikocredit measures effects on wellbeing using the Progress out of Poverty Index (PPI) Scorecard of 10 questions Country specific Easy to use Basis for calculating poverty risks

25 Measuringoutcomes

26 Analysingoutcomes Effects of Microcredit on the Poverty of Borrowers Research on two MFI in the Philippines and India

27 Outcome findings 100 Percentage of poor people among clients Percentage of clients living below national poverty line Number of loans

28 Outcome findings Do rural microcredit borrowers fare better in reducing poverty than urban borrowers? Research on 3 MFIs in the Philippines und India

29 A significant gap 70 PPI Score Urban 50.8 Rural

30 Urban clients benefit from microloans but Urban PPI Score Rural

31 rural clients benefit more PPI Score urban 50.8 rural 65.2 The average change of scores for rural clients was between 0.5 and 4 points stronger than for urban clients

32 The gap is becoming (slightly) smaller PPI Score

33 Fromoutcomestoimpact

34 Academic research

35 Academic research

36 Impact on themicrolevel 1. Income generating activities Access to microcredit propels the founding of small businesses Some positive effects on business size, investments, profits

37 Impact on themicrolevel 2. Household income and consumption Partly positive effects on income, partly no significant changes Subsitutioneffects: less wage labour, fewer social transfers Partly positive effects on total consumption expenditures, partly only for certain consumption sectors, partly no significant effects Spending on temptation goods cut

38 Impact on themicrolevel 3. Nutrition and health After 18 months no significant effects on total health expenditures (Banerjee et al. 2010) Micro loans to women improve childrens health, no effects for men (Pitt et al. 2003). Some positive effects on subjective wellbeing and generalised trust

39 Impact on themicrolevel 4. Gender equality Some studies show positive effects on women s say in financial decision making (Banerjee, Karlan, Zinman2015, 13) Access to finance fosters female group solidarity against domestic violence (Sanyal 2009).

40 Whatimpact? Impact on themicrolevel Central finding of recent research: Summarizing and interpreting results across studies, we note a consistent pattern of modestly positive, but not transformative, effects. (Banerjee, Karlan, Zinman2015)

41 Impact on themesolevel India: poverty in rural districts significantly reduced by access to poverty but not in urban centers (Burgess und Pande 2005) Mexico: higher incomes in communities with acessto finance, investments in durable goods made possible (Bruhn und Love 2013)

42 Impact on themacrolevel Question of importance of a healthy financial system for the economy at large Some indication of a U-shaped relation No evidence of transformative effects of microfinance so far.

43 A goodinstrument. In our minds, microcredit has earned its rightful place as one of the key instruments in the fight against poverty. (Banerjee and Duflo 2011, 171) Foto: The Boston Globe/Getty Images

44 which you need to handle properly. Careful selection of partners Local presence Sharing expertise Longterm partnerships Loans in local currency Microfinance, not just microloans No profit maximization Finance PLUS

45 Capacity building

46 Thank you!