MICROFINANCE PUBLICATION ROUND-UP: Microfinance Handbook; Evolution of Microfinance; Impact of Private Sector Investment on Job Creation

The New Microfinance Handbook: A Financial Market System Perspective;” edited by Joanna Ledgerwood, Julie Earne and Candace Nelson; published by the World Bank Group; February 2013; 504 pages; available at: https://openknowledge.worldbank.org/handle/10986/12272

This book is, in part, an update on the “Microfinance Handbook” published by the International Bank for Reconstruction and Development and the World Bank Group in 1999. The new version takes a broader perspective on microfinance, including suggestions for the financial sector in general as well as telecommunication companies and other service providers, academics and consultants. The new chapters cover topics such as the role of donors in financial inclusion, agricultural finance, insurance and market regulation. The book also includes a list of supplemental information on a range of topics.

Microfinance in Evolution: An Industry Between Crisis and Advancement;” by Cedric Lutzenkirchen and Christian Wiestroffer; published by Deutsche Bank Research; September 2012; 18 pages; available at: http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000294314/Microfinance+in+evolution%3A+An+industry+between+crisis+and+advancement.pdf

This report summarizes changes in the global microfinance market since the 1970s, focusing mainly on the most recent decade. The authors discuss the evolution of microfinance from development programming into commercial ventures with what they call “excessive profit-orientation” and the problems that have resulted for clients. The authors also examine structural changes among microfinance institutions (MFIs) as well as changes in funders and funding, both domestic and international. The report explains country-specific crises within the microfinance sector, including the 2010 crisis in the Indian state of Andrah Pradesh, citing problems that were common to many of the MFIs involved. The authors conclude by calling for a “new balance…between the social development approach and the commercial approach.”

Meta-Evaluation on Job Creation Effects of Private Sector Interventions;” by Gloria Paniagua and Anastasiya Denisova; published by the International Finance Corporation (IFC); September 2012; 42 pages; available at: http://www1.ifc.org/wps/wcm/connect/74f6e3004ea8f595906fd162c44d0d70/Jobs_Meta-evaluation_Sept.+4th_clean_FINAL.pdf?MOD=AJPERES

This report reviews 39 evaluations performed by the International Finance Corporation (IFC) and other development financial institutions between 2000 and 2011 to determine which types of interventions “catalyze job creation.” The authors find that approximately 26 percent of the evaluations examine job creation, and that those evaluations demonstrate that improved financial access can help firms expand and thus create new jobs. Microfinance can improve job creation through both the creation of new jobs through the creation of new companies as well as the expansion of jobs in existing companies, and group loans had a stronger effect on employment than individual loans, according to the study. Improved infrastructure such as roads also had positive net effects, but some areas experienced a reduction in jobs as a result of competition from imports. Reforms in the investment arena also perpetuated the creation of new jobs, although the authors argue that many new firms that are established after the reforms fail to stay in business as long as two years. Finally, job training for youth sometimes resulted in no effect job creation, with positive effects most likely when classroom and on-the-job training were combined.

By Charlotte Newman, Research Associate

Sources and Additional Resources:

The New Microfinance Handbook: A Financial Market System Perspective, https://openknowledge.worldbank.org/handle/10986/12272

Microfinance in Evolution: An Industry Between Crisis and Advancement, http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000294314/Microfinance+in+evolution%3A+An+industry+between+crisis+and+advancement.pdf

Meta-Evaluation on Job Creation Effects of Private Sector Interventions, http://www1.ifc.org/wps/wcm/connect/74f6e3004ea8f595906fd162c44d0d70/Jobs_Meta-evaluation_Sept.+4th_clean_FINAL.pdf?MOD=AJPERES

MicroCapital.org story, March 8, 2013, “MICROFINANCE PUBLICATION ROUND-UP: The Role of Business in Society; Life Microinsurance in Mexico; Social Performance Report for India,” https://www.microcapital.org/microfinance-publication-round-up-the-role-of-business-in-society-life-microinsurance-in-mexico-social-performance-report-for-india/

MicroCapital.org story, March 7, 2013, “MICROFINANCE PUBLICATION ROUND-UP: The Business Case for Life Microinsurance in the Philippines, MIX Map of Financial Inclusion in India, 2012 Sub-Saharan Africa Snapshot,” https://www.microcapital.org/microfinance-publicaton-round-up-the-business-case-for-life-microinsurance-in-the-philippines-mix-map-of-financial-inclusion-in-india-2012-sub-saharan-africa-snapshot-2/

MicroCapital Universe Profile: International Finance Corporation (IFC)
http://microcapital.org/microfinanceuniverse/tiki-index.php?page=International+Finance+Corporation+%28IFC%29

MicroCapital Universe Profile: World Bank Group
http://microcapital.org/microfinanceuniverse/tiki-index.php?page=The+World+Bank+Group

Do you know that MicroCapital publishes the MicroCapital Monitor newspaper each month? Find out more at https://www.microcapital.org/products-page/

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