Despite global recognition and sufficient history of microfinance there is mixed evidence of its net benefits and very limited empirical work on its contribution to financial intermediation and economic growth. Addressing this gap we aim to reveal whether and how microfinance is transferred to growth. Our conceptual approach is based on a broader finance-and-growth nexus where microfinance is s...

Large and regular seasonal price fluctuations in local grain markets appear to o↵er African farmers substantial inter-temporal arbitrage opportunities, but these opportunities remain largely unexploited: small-scale farmers are commonly observed to “sell low and buy high” rather than the reverse. In a field experiment in Kenya, we show that credit market imperfections limit farmers’ abilities t...

The rapid expansion of microcredit in recent years renders knowledge of its impact on poverty critical. Unfortunately, empirical investigations have been limited by endogeneity issues. This paper suggests a strategy for handling the endogeneity of microcredit borrowing without specifying instrumental variables, allowing for estimation using observational data. The model is identified by an assu...

In a panel framework that includes 18 countries, this paper studies the short and long run effect of financial development on economic growth and the determinants of financial development in Latin America. Financial development shows a positive effect on economic growth in the long run, but a negative effect in the short run for the full sample. When the sample is divided by income levels, this...

A literature has developed to substantiate Rosenstein-Rodan's intuition that coordination of a critical mass of investments may induce industrialization through a `big push.' This literature has essentially ignored the question of what economic institutions may overcome the coordination failures which give rise to an `underdevelopment trap.' In this paper we propose that banks may act as a `cat...

A central theme of China’s 11 Five Year Plan (2006-2010) is the building of a “new socialist countryside.” Over recent years, reforming rural finance and improving access to credit by small businesses and farmers has figured increasingly prominently in the leadership’s proclamations of support to rural economic development. While hundreds of pilot innovations in small-scale finance have been pu...

We examine the e¤ect of US branch banking deregulations on the entry size of new …rms using micro-data from the US Census Bureau. We …nd that the average entry size for startups did not change following the deregulations. However, among …rms that survived at least four years, a greater proportion of …rms entered either at their maximum size or closer to the maximum size in the …rst year. The ma...

This paper analyzes the linkages between credit supply conditions and bank lending. Building on the recent work of Gilchrist and Zakraǰsek [2011], we use the excess bond premium—a component of corporate credit spreads designed to measure shifts in the risk attitudes of financial intermediaries—to empirically identify credit supply shocks. Our results indicate that shocks to the excess bond prem...

At the height of the Great Depression a number of leading U.S. economists advanced a proposal for monetary reform that became known as the Chicago Plan. It envisaged the separation of the monetary and credit functions of the banking system, by requiring 100% reserve backing for deposits. Irving Fisher (1936) claimed the following advantages for this plan: (1) Much better control of a major sour...

the purpose of this paper is to examine the determinants of the timing of bank failure/merger in 10 asian countries over the period of 1999-2007 using a multivariate logit model and a split population duration analysis. apart from bank-specific information, we also focus on the effects of macroeconomic and financial characteristics. the following empirical findings are obtained. first, the resu...