Contact Information:
Bobbie Mixon
National Science Foundation

Kredyty mieszkaniowe Kredyty mieszkaniowe

Sprawdź aktualny ranking najlepszych kredytów mieszkaniowych w Polsce - atrakcyjne kredytowanie nieruchomości. - Press Release Distribution
RSS - Press News Release
Add Press Release

Can small loans reduce poverty?

Yale University economist says microfinance yields surprising results

Can small loans reduce poverty?
( Small loans, somewhere in the neighborhood of $100 to $500 dollars, are an increasingly popular weapon in the fight to reduce poverty. Called microcredit, institutions dole out these monetary advances to help extremely poor people engage in successful entrepreneurship and improve their quality of life.

While proponents extol its virtues, researchers look for evidence; they want to know if it works. Does it really increase financial development and help individuals make solid monetary decisions as its supporters claim?

"Microfinance works," said Dean Karlan, economics professor at Yale University. "But it isn't the Hollywood ending that we've been sold."

Karlan, coauthor of a recent book More Than Good Intentions that also discusses research on this topic, and Jonathan Zinman, an economics professor at Dartmouth College in Hanover, N.H., recently published the results of a 22 month study that examined how individuals make economic decisions over time and whether micro-lending policies aid economic development.

"Proponents argue microcredit mitigates market failures, spurs microenterprise growth and boosts borrowers' well-being," the researchers write in a report, which appears in the June 10 issue of Science. The National Science Foundation's Division of Social and Economic Sciences funds the work.

The researchers found "microloans increase ability to cope with risk, strengthen community ties and increase access to informal credit." But they also found the subjective well-being of loan awardees slightly declined. In addition, they found awardees reduced their overall number of business activities and those in the study did not increase investment in their businesses.

"Enterprise growth is the canonical story that the microcredit industry promotes," said Karlan about the amount of financial investment. "This isn't to say that microcredit never produces such an impact. But it should not be seen as the singular story. We need to know more about how people actually use their loans, and we should not be judgmental if the answer is not always for investment in enterprise."

"Traditional" microlenders target women who operate small-scale businesses and use group lending mechanisms. But the expansion of microlending means it often ends up looking more like traditional retail or small business lending that has the same impact on women and men.

Optimism, calmness, worry and job satisfaction was about the same for both men and women in the study. "We do not find any evidence that treatment effects are more pronounced for female borrowers," the researchers write.

Treatment effects refer to the financial and psychological outcomes of the mircoloans.

Karlan and Zinman designed an innovative experiment that randomly assigned individual microloans of, on average, $225 through credit scoring to 1,601 individuals in the Philippines. The loans, assigned to microentrepreneurs, were short-term and were required to be repaid on fixed schedules with equal periodic repayments.

The research design employed credit scoring software to approve loans randomly for marginally creditworthy applicants and then used survey data to measure how the loans impacted the awardees' later access to credit.

By randomizing the marginal credit decisions, Karlan and Zinman were able to measure the impact of the loans, screening off other causal factors. Moreover, these standard, first-time-borrower loans were made through a lender that had no ties to the survey firm--important for eliminating potential bias.

Loans were to be paid back in 13 weeks, with weekly repayments and a monthly interest rate of 2.5 percent charged over the declining balance. But several upfront fees combined with the interest rate to produce an effective annual interest rate greater than 60 percent.

Karlan and Zinman say the high annual interest rate may have contributed to a marginal improvement in risk management. "We do find that microloans increase ability to cope with risk," they write, "strengthen community ties, and increase access to informal credit. Thus microcredit may work, but through different channels often hypothesized by its proponents."

Informal credit was loans provided by family members and friends. The researchers found awardees had greater access to these loans once they had been the recipient of a microcredit loan.

"Access to credit lowered the demand for risk mitigation tools elsewhere," said Karlan. "We also found a similar result in our earlier South Africa study, in which individuals with access to credit were more able to keep their jobs--more able to absorb some sort of shock, which if they did not absorb would have meant losing their job."

Karlan is the president and founder of Innovations for Poverty Action, a non-profit organization that seeks to bridge the gap between academia and economic development policy. Zinman is a research affiliate of the organization.

"The biggest lesson we see here is one of process, and of shedding ourselves of preconceived notions on what credit is for," said Karlan. "People use credit for many reasons, beyond business investment, and that is good."

"What we need now is more studies like this that help understand the patterns of how credit is used, and if credit is being used to alleviate poverty, then we need further studies to learn how and when that happens."


[Attachments] See images for this press release:
Can small loans reduce poverty?


NASA sees heavy rainfall in Tropical Storm Sarika

NASA sees heavy rainfall in Tropical Storm Sarika
Tropical Depression 05W has grown into a tropical storm and given the name Sarika as it heads toward China. Satellite imagery from NASA shows that the center of the storm seems to be separated from the strongest thunderstorms. The Tropical Rainfall Measuring Mission (TRMM) satellite that is co-managed by NASA and the Japanese Space Agency measures rainfall in the tropics, and today's satellite imagery (June 10, 2011) on Tropical Storm Sarika shows that the heaviest rainfall (falling at 2 inches/50 mm per hour) is south of the center of the storm's circulation. That's ...

Who's My Lawyer?

If you are calling your immigration attorney's office and find yourself asking this question, your case may be in serious trouble. Recently, I have been contacted by scores of individuals seeking consultation on their cases because they cannot ascertain who is supposed to be taking care of their cases at the law firm they retained! Although this sounds absurd, the problem is that the "big" firms they hired have a serious problem with employee turnover: attorneys quitting their jobs and leaving their cases behind. People seeking an attorney are always in a vulnerable ...

Eye say, Adrian is still a powerful hurricane on NASA satellite imagery

Eye say, Adrian is still a powerful hurricane on NASA satellite imagery
Hurricane Adrian has been good at hiding his eye from satellite imagery over the last two days, but the latest Aqua and GOES-13 satellite imagery provides the best look at the eye, despite some overcast inside. The Geostationary Operational Environmental Satellite called GOES-11 captured a visible image of Major Hurricane Adrian on June 10 at 1601 UTC (12:01 p.m. EDT).The image, that shows the eye of the storm with some dense overcast in it, was made at the NASA GOES Project out of NASA Goddard Space Flight Center, Greenbelt, Md. GOES-13 is managed by NOAA. When NASA's ...

Aer Lingus Celebrates 75th Anniversary

Aer Lingus has unveiled a new retro painted aircraft in the former 1960s 'Irish International' livery, to mark its 75th anniversary celebrations. The newest addition to the fleet, an Airbus A320- EI-DVM, MSN 4634 series, named 'St Coleman', was painted especially for the anniversary celebrations and unveiled at a ceremony at the iconic, Old Central Terminal Building Dublin airport - designed by the late Desmond FitzGerald. Cabin crew modelled vintage uniforms, from each decade beginning 1945 through to the current Aer Lingus uniform by acclaimed designer, Louise Kennedy. Speaking ...

NASA sees the low that won't quit: System 94L

NASA sees the low that wont quit: System 94L
The northern Caribbean low pressure area known as System 94L is continually monitored by the GOES-13 Satellite, imagery today shows that it has moved north and is raining on eastern Cuba and the Bahamas. The National Hurricane Center has resumed noting that this system has a meager chance of developing into a tropical depression. In an update today from NHC, they note that System 94L has a 10 percent chance of developing in the next 48 hours. The chances of development are still low because upper-level winds are strong enough to prevent any organization of the low. Meanwhile, ...

Social scientists study impact of human adult stem cell research

Social scientists study impact of human adult stem cell research
New research says studying both adult and embryonic stem cells can benefit medical science, but banning the study of either type could harm studies of the other. Researchers from the University of Michigan, Stanford University and the Mayo Clinic in Rochester, Minn. recently investigated whether the increased number of studies with a certain type of adult stem cell has changed the overall course of research in the field. The researchers analyzed more than 2,000 scientific papers and found adult stem cells are not replacing human embryonic stems cells in the laboratory. ...

Kuoni Wins Daily Telegraph Ultratravel Award for Best Large Luxury Tour Operator

Kuoni, leading travel specialist, has won the prestigious ULTRA (Ultimate Luxury Travel Related Award) for Best Large Luxury Tour Operator at the Daily Telegraph's Ultratravel Awards for the fifth consecutive year, as voted by the readers of the Daily Telegraph's Ultratravel magazine. The awards, hosted by Telegraph Travel Editor Graham Boynton, were held on Monday 16th May at London's Savoy Hotel and were supported by a host of 'Help for Heroes' celebrities, which included venerated heroes such as the oldest living spitfire pilot and the widow of an incredible bomb ...

'1-stop' clinic ups mental health, social work visits for veterans

Iraq and Afghanistan veterans who visited a VA integrated care clinic were much more likely to undergo initial mental health and social work evaluations than veterans who visited a standard VA primary care clinic, according to a study led by a San Francisco VA Medical Center researcher. The increase was especially significant for women veterans, younger veterans, veterans with mental health diagnoses, and veterans who screened positive for traumatic brain injury. The study was published on June 7, 2011 in the electronic Online First section of the Journal of General ...

Grand Royale - The 5 Star Hotel London is Offering Great Deals

With thousands of people planning for trips to London, the hotel has in fact decided to get into the spirit of providing 5 star London hotel deals to its guests for their stay. The 5 star hotel London is offering free broadband, free breakfast and superb rates. Guests can even win a free night stay in this hotel by entering a draw. Grand Royale London hotel is even offering the Premium Club Rewards, an exclusive reward programme for its most loyal and dedicated guests, providing them with some best in benefits and services. As a Premier Club Rewards member, guests get ...

Significant litter of cheetah cubs born at Smithsonian Conservation Biology Institute

Significant litter of cheetah cubs born at Smithsonian Conservation Biology Institute
Five cheetah cubs were born May 28 to 6-year-old Amani at the Smithsonian Conservation Biology Institute in Front Royal, Va. Amani is a dedicated mother according to keepers, who have observed her nursing and grooming the cubs. This litter is particularly significant to the Association of Zoos and Aquariums' Species Survival Plan for cheetahs because cheetah births in zoos across the country have dwindled. The SSP matches animals across the country to ensure genetic diversity in the population. This is the only litter of cheetahs born this year in a North American zoo. ...


How your brain decides blame and punishment -- and how it can be changed

Uniquely human brain region enables punishment decisions

Pinpointing punishment

Chapman University publishes research on attractiveness and mating

E-cigarettes: Special issue from Nicotine & Tobacco Research

Placental problems in early pregnancy associated with 5-fold increased risk of OB & fetal disorders

UT study: Invasive brood parasites a threat to native bird species

Criminals acquire guns through social connections

Restoring ocean health

Report: Cancer remains leading cause of death in US Hispanics

Twin study suggests genetic factors contribute to insomnia in adults

To be fragrant or not: Why do some male hairstreak butterflies lack scent organs?

International team discovers natural defense against HIV

Bolivian biodiversity observatory takes its first steps

Choice of college major influences lifetime earnings more than simply getting a degree

Dominant strain of drug-resistant MRSA decreases in hospitals, but persists in community

Synthetic biology needs robust safety mechanisms before real world application

US defense agencies increase investment in federal synthetic biology research

Robots help to map England's only deep-water Marine Conservation Zone

Mayo researchers identify protein -- may predict who will respond to PD-1 immunotherapy for melanoma

How much water do US fracking operations really use?

New approach to mammograms could improve reliability

The influence of citizen science grows despite some resistance

Unlocking secrets of how fossils form

What happens on the molecular level when smog gets into the lungs?

Using ultrasound to clean medical instruments

Platinum and iron oxide working together get the job done

Tiny silica particles could be used to repair damaged teeth, research shows

A quantum lab for everyone

No way? Charity's logo may influence perception of food in package

[] Can small loans reduce poverty?
Yale University economist says microfinance yields surprising results is a service of DragonFly Company. All Rights Reserved.
Issuers of news releases are solely responsible for the accuracy of their content.