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Using a new and representative data set of Chinese household finance, this paper documents household access to and costs of finance, along with their correlates. As in most developing countries, informal finance is a crucial element of household finance, and wealth tends to be associated with better access to formal and informal finance. Better financial knowledge shifts loan portfolios toward formal sources relative to informal ones. Connections to the Communist Party are associated with significantly better access to finance in rural areas but not in urban areas. A larger social network is positively associated with access to informal finance. Controlling for household characteristics, rural residents pay interest rates on loans similar to urban residents. Younger residents pay higher rates, while households on firmer economic footing face lower rates. Taking financial classes and college education is associated with higher interest rates for urban residents, suggesting perhaps that financial knowledge coincides with greater demand for credit in areas with more economic opportunity. Overall, the findings suggest that Chinese residents face dual credit markets, with the poor, young, those with poor financial knowledge, and those with larger family sizes relying much more on informal finance, while others are better able to access formal finance.

Growing research and policy interest focuses on the misallocation of output and factors of production in developing economies. This paper considers the possible misallocation of financial loans. Using plant-level data on the organized and unorganized sectors, the paper describes the temporal, geographic, and industry distributions of financial loans. The focus of the analysis is the hypothesis that land misallocation might be an important determinant of financial misallocation (for example, because of the role of land as collateral against loans). Using district-industry variations, the analysis finds evidence to support this hypothesis, although it does not find a total reduction in the intensity of financial loans or those being given to new entrants. The analysis also considers differences by gender of business owners and workers in firms. Although potential early gaps for businesses with substantial female employment have disappeared in the organized sector, a sizeable and persistent gap remains in the unorganized sector.

This paper studies the use of psychometric tests, which were designed by the Entrepreneurial Finance Lab as a tool to screen out high credit risk and potentially increase access to credit for small business owners in Peru. The analysis uses administrative data covering the period from June 2011 to April 2014 to compare debt accrual and repayment behavior patterns across entrepreneurs who were offered a loan based on the traditional credit-scoring method versus the Entrepreneurial Finance Lab tool. The paper finds that the psychometric test can lower the risk of the loan portfolio when used as a secondary screening mechanism for already banked entrepreneurs—that is, those with a credit history. For unbanked entrepreneurs—those without a credit history—using the Entrepreneurial Finance Lab tool can increase access to credit without increasing portfolio risk.

Demand is also fueled by other factors: in many emerging economies a ‘demographic dividend’ of young people, the product of significant reductions in child and infant mortality rates—is poised to enter education and work. And, according to the 2014 Millennium Development Goals report, nearly 90 percent of children in developing regions are on track to complete primary education. The shift from agricultural to knowledge-based economies also plays a significant role in creating demand for higher learning. The purpose of the study was to identify key success factors in private sector student lending in order to support IFC in understanding, and potentially making investments, in student lending across a range of emerging markets. The study examined 70 student lending models globally as well as a range of innovative financial models. Detailed case studies were developed for eight compelling and diverse private sector student lending models. The study also highlighted a range of innovative financial models including crowd funding, big box banking, social impact bonds, and other mechanisms. The purpose of this investigation of innovative financial models was to see what leading-edge methods might be at work in other sectors and to see if they might offer inspiration to student lending.

Very small enterprises (VSEs) in Latin America and the Caribbean (LAC) represent a broad and heterogeneous segment, often underserved by formal financial institutions. They are generally informal and often family businesses. The financial needs of these enterprises are typically overlooked by “downscaling” banks, which find larger and often more formal small and medium enterprises (SMEs) to be a more natural market for their products and services. Microfinance Institutions (MFIs) are starting to move upmarket to serve SMEs, and in particular, VSEs within this segment. However, they use varying definitions, methodologies and products to do so and to date there has been little research or documentation of their experiences. This report highlights the results of a recent study of the existing practices in Latin America of MFIs serving VSEs, where VSEs are considered to be those businesses with financing needs of between US$7,000 and US$30,000. It is a starting point for an institution considering entering the segment, or for one that finds itself having grown into the segment “organically” but with a view to strengthen its position. It includes several checklists for MFIs interested in expanding upmarket into the VSE space, as well as more detailed discussions and examples of the most relevant points.

PhD (Economics), North-West University, Vaal Triangle Campus, 2014 The study investigated on the channels of poverty reduction in Malawi, using household data aggregated at district level. Malawi is divided into 31 districts with different demographics and opportunities. Macro level data which was calculated in terms of district percentages were used in the study. The study emanated from the premise of the link between economic growth and poverty reduction. With the trend of growth that was seen in Malawi from 2004 to 2012; there was an interest to further investigate if there had been any significant change in the poverty levels as measured in the country by the National Statistical office. The objectives of the study were two pronged; the theoretical and the imperial. The theoretical objectives were; to provide a background of Malawi, to review the literature on poverty theories, to review the literature on the link between poverty reduction and the channels of potential impact, namely: economic growth, education attainment, access to loans and enterprises, agricultural production, population growth and employment or unemployment. The empirical objectives on the other hand were; to investigate if there has been any poverty reduction in the years 1998 to 2012 in Malawi, to assess how economic growth at a district level proxied by agriculture production and land holding affect poverty at district level in Malawi, to assess how education attainment affect poverty reduction at a district level in Malawi, conduct an analysis on how employment or unemployment affect poverty reduction at a district level. Also investigate the relationship between access to loan and poverty reduction in Malawi and to determine if different poverty measures exhibit statistically significant different responses to channels under investigation namely economic growth, education levels, population growth and access to loans at district level. The study employed descriptive and regression analysis to arrive at the results for the set empirical objectives. Due to the fact that panel data was used for districts, a random effects regression model was used for the estimations. A Breusch-Pagan test was used to decide on random effects as opposed to fixed effects model. The results from the regressions showed that all the channels that were hypothesised to be of importance, came out significant from objective based regressions. These regressions were run separately for each channel, with the district poverty rate as a dependent variable. The study found the considered channels of poverty reduction to be significant at different levels. First, it was established that there has been significant growth in Malawi. This growth however was seen to be erratic where in other years it was higher and in other years lower. A more important conclusion from the first objective was that there had been poverty reduction in the country between 1998 and 2012. A t test was also used for mean difference in the years where Integrated Household surveys were conducted namely, 1998, 2004 and 2012. The t-test showed a statistically significant reduction in poverty between 1998 and 2012 of up to 15.07. The study also found that the relationship between agricultural production and poverty was significant especially looking at local maize production which had a negative significant coefficient. Implying that, an increase in agricultural production has an associated reduction in the district poverty rate. It was also established from the results that input subsidy had a significant impact on poverty at district level. This input programme which helps poor households to access fertilizer at a highly subsidised price had a negative relationship with poverty that was significant. This shows that government’s effort in funding the national wide fertilizer subsidy has some bearing on the poverty level of the country. On the relationship between education and poverty reduction, the study also found a significant relationship. This was clear on the impact of literacy rate on poverty reduction. The regression results showed a significant negative relationship between literacy rate and poverty reduction. The channels of employment in poverty reduction was found to be significant but in a direction unexpected. Labour force participation had a positive influence on poverty rate at district level. A number of things were discovered; first the employment rate as reported in the statistical year book is misleading. What is considered employment in these statistics is basically subsistence farmers who take up more than 80% of the employment rate. Second, most of what is recorded as employment is non-skill labour with people without education recoding a 99% employment rate. This is a misleading record in as far as what employment for poverty reduction is concerned. It is therefore not a surprise that, most of the people reported as employed are also found below the poverty line some even below the ultra-poverty line. A special contribution resulting from the study is the framework on the interconnection between the channels. The study points out the fact that for agricultural production to thrive there is need for education. Also for agricultural production to succeed there is need for the farmers to have access to loans. the study discovered that more than 45 percept of the loans people obtained were for agricultural inputs. There is also a link between education and employment, education and access to loans and access to loans and employment through business start-ups that create employment. The conclusion of the study is that policies that are intended to reduce poverty should be aimed at promoting education participation. There is also need to create an environment that enables the poor to access loans and credits at a reasonable interest rate. The government should continue with the input subsidy programme for the poor household. There is need for the national statistical office to reconsider the definition of employment so that the government works with practical figures, other than the inflated employment rates that are reported in the statistical year book. Doctoral

Energy poverty is a global problem: access to energy services is crucial to meet basic household needs, deliver and access public services, and generate income. Less than 10 percent of Sub-Saharan (SSA) rural households have access to electricity, with an overall access rate below 25 percent. One of the main obstacles for SSA electrification practitioners is the difficulty in obtaining practical and timely knowledge on how to overcome economic, technical, institutional, and political barriers to electrification in their day-to-day work. Launched in 2008, the Africa Electrification Initiative (AEI) seeks to create and sustain a living body of practical knowledge and a network of SSA practitioners for the design, development, and implementation of rural, peri-urban, and urban on-grid and off-grid electrification programs. AEI supports the network by organizing workshops and promoting online discussions and knowledge exchanges on topics important for its members. The workshop set out to address a number of relevant electrification topics previously identified through in-depth discussions and ongoing knowledge exchanges among a growing network of SSA practitioners. The workshop's main focus was on ground-level implementation of different institutional approaches to electrification, with particular focus on the experiences of rural energy agencies/rural energy funds (REAs/REFs) across SSA. The workshop lasted two and a half days, comprising 21 sessions, including regular session panels and discussion clinics with a longer duration. It also featured exhibition space for posters submitted by participating institutions, an expo of approved lighting products from the lighting Africa program, and an awards ceremony to recognize the best papers submitted by SSA electrification practitioners in response to the AEI call for papers.

Inclusive growth (IG) analysis involves analyzing the available data in a country to determine the best course of action for accelerating growth and or improving the distribution of the opportunities and benefits from the growth process. In economies in which international migration is a significant trend, that determination may be especially challenging. The international migration phenomenon can contribute to (or detract from) growth and its distribution through myriad number of complex and sometimes divergent channels, and these effects can change substantially over time. The ability to analyze these impacts, however, is often significantly handicapped by a lack of appropriate data. Moreover, because the migration decision is inherently a private decision made by households in the best interest of their welfare, determining the policy conclusions based on the results of inclusive growth analysis is often unclear. Governments are rightfully wary of interfering with the migration process. This paper examines the issue of international migration in inclusive growth. The aim is to provide the practitioners of inclusive growth diagnostics a useful framework for assessing the nature of the international migration phenomenon, and to highlight the key tools utilized in evaluating its current and potential impact on shared growth.

Despite the recent slowdown, the underlying growth of the global economy remains solid. After a 4 percent growth in 2010, Russia's real output is expected to grow 4.4 percent in 2011, increasingly driven by domestic demand. Russia's households have absorbed the food price shock thanks to a combination of higher wages and pensions, and resort to private and public safety nets. The country emerged from the global recession with lower unemployment and poverty than feared. But global risks and uncertainties increased with the new oil shock. Although the short-term impact will be positive for Russia's export and fiscal revenues, there is no room for complacency. Macroeconomic policy should focus on the short-term objective of controlling inflation and medium-term fiscal adjustment towards long-term, sustainable level of non-oil fiscal deficit. Improving the efficiency of public expenditure to create fiscal space for productive infrastructure and strengthening the investment climate for the private sector remain among key long-term challenges. The ongoing rethinking of the government's long-term strategy and a period of high oil revenues provide an opportunity to focus on these long-term issues more forcefully than during the global crisis.