Ricardo Bebczuk and Francisco Haimovich, published by CEDLAS, Universidad Nacional de la Plata, March 2007, 43 pages, available on the Microfinance Gateway at http://www.microfinancegateway.org/content/article/detail/39791
The results of the paper, by Ricardo Bebczuk and Francisco Haimovich, indicate that less than 10% of poor households surveyed in Latin America have access to credit. Nonetheless, the authors’ exploratory statistics prove credit is indeed positively correlated to both an increase in income and an increase in household education. Furthermore, the increase in probability of completing secondary school is on average higher than the increase for primary school. However, it is important to note the results varied across countries. No gender effects were apparent in the analysis to support the Millennium Development Goal to promote gender equality and empower women.
Mr. Bebczuk and Mr. Haimovich use household survey data from numerous Latin American countries to estimate the degree to which credit affects household income as well as the probability of children attending both primary and secondary school. The paper aims to determine the suitability of using microfinance as a tool in reaching the Millennium Development Goals (MDGs), specifically the goals to (1) Eradicate extreme poverty and hunger, (2) Achieve universal primary education, and (3) Promote gender equality and empower women.
The authors begin with an introduction section to describe and outline the paper’s content. In Section 1, the authors review literature and existing hypotheses to lay the foundation for their study. In Section 2, the content and main features of the household database are described and statistical data is presented. Section 3 contains the authors’ econometric analysis and their empirical findings on the effect of credit on labor income and primary and secondary school attendance of the poor households. Here, the authors run multi-variate regressions to generate their impact estimate. Section 4 contains microsimulations conducted by the authors to assess the overall effect of increases in credit. The authors end the paper with a conclusion section to highlight the results of their studies and to make their recommendations.
The authors conclude that microfinance can increase household income and improve education rates only if a household is willing and able to take advantage of such services. The authors suggest the most lasting effect of a microfinance program is the experience of participating in such a program. Behavioral changes, interaction with other prospective microentrepreneurs, the access to business and technical expertise, and the opportunity to connect with non-bank and bank financial intermediaries all contribute to the enduring effects of a microfinance program. Additionally, the authors believe although microfinance is a relatively powerful tool, it has limits for meeting the Millennium Development Goals. According to Mr. Bebczuk and Mr. Haimovich, microfinance should not be considered an end-all solution to global poverty alleviation, but should augment other long-term initiatives.
Ricardo Bebczuk is Licenciate in Economics at the Universidad Nacional de La Plata in La Plata, Argentina. Mr. Bebczuk holds a Master in Banking Disciplines (joint degree by Universidad Nacional de La Plata and Universita di Siena, Italy), and Master of Sciences and Ph.D. in Economics from University of Illinois at Urbana-Champaign. Mr. Bebczuk is Chief Economist at the Center for Financial Stability in Buenos Aires, and has served as a consultant for the Secretary of Finance on the reform of the financial system and for private consulting and risk rating agencies. He has been a researcher in projects with the IADB, the World Bank, and the OECD.
Francisco Haimovich is also a faculty member of the Universidad Nacional de La Plata, specifically in the university’s School of Economic Sciences Center for the Study of Distribution, Labor and Social Affairs (CEDLAS). Education and employment information on Mr. Haimovich was not available.
The Universidad Nacional de La Plata is one of the leading educational institutions in the Argentina. It currently has over 75,000 regular students, 8,000 teaching staff, 16 faculties and 106 available degrees.
-Steven Craig
Additional Resources:
World Bank: Presenter Bio for Ricardo Bebczuk
IDEAS, Information about Francisco Haimovich: http://ideas.repec.org/f/pha330.html
Universidad Nacional de La Plata: http://www.unlp.edu.ar/
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