Samuel Annim
PhD Thesis Title
Microfinance paradigm: institutional performance and outreach
Supervisors
Dr. Katsushi Imai and Prof. Thankom Arun
Abstract
Microfinance research concerns addressed in this thesis relate to: (1) targeting of clients vis-à-vis financial sustainability; (2) loan size effect of interest rate and clients' well-being status; (3) economic governance and the dual objectives of microfinance institutions; and (4) patterns, trends and drivers of microfinance institution's efficiency. The thesis emphasises operational issues that affect institutional performance and outreach of microfinance institutions rather than impact of microfinance intervention on poverty reduction. The thesis revolves around four empirical chapters that seek to address the above research concerns.
Both micro and macro-level analyses have been explored with the aim of identifying institutional and public policies that drive the success of microfinance interventions. Micro level data from households in Ghana and cross country data mainly from the Microfinance Information Exchange (MIX) market are used. Varied microeconometric techniques (ordinary least squares, instrumental variable estimation, quantile regression, pooled regression, fixed and random effects estimations, Hausman-Taylor, Fixed Effects Vector Decomposition, stochastic frontier analysis and non-parametric efficiency estimations) are used depending on the hypotheses being considered in each of the empirical chapters.
The main findings are: observed trade-off between financial sustainability and reaching poorer clients; formal institutions dispensing their own funds target poorer clients; pronounced variations in responsiveness of loan size to interest rate changes; semi-elasticity of loan amount responsiveness to a unit change in interest rate is more than proportionate and very significant for the poorest group; lesser time in securing property and availability of credit information show positive effects in targeting poorer clients; both type (pure technical and scale) and scope (narrow and broad) of financial efficiency show varying trends; and lastly, negative effects of bureaucracies in property registration and lack of credit information on social efficiency are also observed.
This thesis suggests the following recommendations both for management of microfinance institutions and other stakeholders including international microfinance investors and government: harmonizing microfinance programmes irrespective of the source of funds; segmenting microfinance outreach markets based on socio-economic well-being; curtailing bureaucracies in property registration; and providing credit related information. These are paramount to the success of the microfinance paradigm, especially in achieving its social objective.
Bio
The author's aim to pursue a degree of Doctor of Philosophy (PhD) in Economics was underpinned by both passion and professional ambition. Although the former contributed in settling on a broad research topic, as a member of the teaching staff of the University of Cape Coast, Ghana, undertaking a PhD was more of a necessity.
Beyond the inevitable career path demand for a PhD, the choice of a research topic was competitive. Over the years, the author gained interest and built research capacity in microfinance and household health decision-making issues. The author, prior to his PhD, was involved in a World Bank/Government of Ghana sponsored microfinance research on the theme "Poverty Assessment and a Comparative Study of Rural Micro Finance Institutions and Government Credit Programmes in Ghana". In spite of skills developed from engaging in health research projects and the Health Economics focus of the author's Master of Philosophy thesis, the timing, data coverage (nationally representative) of the microfinance project, and anxiety among social scientists on the capability of microfinance to lead a development path influenced the choice of the thesis topic.
As a member of the core research team on the microfinance project, the author interacted with most of the stakeholders (Government, donors, the poor and vulnerable, community leaders and microfinance practitioners), which confirmed several conjectures surrounding the capability and resonance of microfinance paradigm. In spite of the much touted success stories across the globe including the famous Grameen experience of Bangladesh, the nervousness generated by the conjectures triggered the need for an academic research in the area of microfinance.
Beyond the microfinance issues addressed in this thesis, the author in collaboration with other researchers including his PhD supervisors (Dr. Katsushi Imai and Prof. Thankom Arun) has produced three academic journal articles on microfinance. Also, the author has extracted two empirical papers from this thesis as published working papers. These papers are:
- 2010 "Microfinance and Household Poverty Reduction: New Evidence from India" World Development – doi:10.1016/j.worlddev.2010.04.006 with Imai, K and Arun, T.
- 2009 "Who is reaching whom? Outreach of Microfinance in Ghana. International" NGO Journal Vol. 4 (4), pp. 132-141; with Awusabo-Asare, K, and Abane A.
- 2008 "Spatial and Socio-economic dimensions of clients of Microfinance institutions in Ghana", Journal of Geography and Regional Planning. Vol.1(5), pp. 085-096; with Awusabo-Asare, K. and Asare-Mintah, D.
- 2009 "Targeting the Poor versus Financial Sustainability and External Funding: Evidence of Microfinance Institutions in Ghana" BWPI Working Paper No 88, ISBN: 978-1-906518-87-5
- 2009 "Sensitivity of Microfinance Loan Size to Lending Rates: Evidence from Ghana", MPRA Paper 21280: University Library of Munich, Germany.
In addition to the above, the author has other publications on health, child labour and policy effects of changes in macroeconomic variables on poverty reduction.
The PhD programme's life span witnessed professional engagements related to research. The author in collaboration with his supervisors currently has three international projects on-going. In two of the three international projects, the author has been involved in the entire research process that is from proposal writing to the currently on-going implementation phase. This provides the author with added skills that is normally rare to ascertain during a PhD programme.
The research projects are:
- British Council Fourth Round DelPHE Project – "A Multi-country study on Microfinance, Gender and Poverty";
- African Economic Research Consortium Project – "Integrated Financial Services and Child Nutrition: Are there any Spill-over Effects? – Evidence from Ghana"; and
- Economic Research Council Research Project – "On the Change of Poverty and Undernutrition in Rural India".
Further to the above, the author gained three years international teaching experience during his PhD programme. As a Graduate Teaching Assistant, he was involved in tutoring both undergraduate and graduate courses. Specifically, UK Micro and Macro Economics, Applied Economics, Computing for Social Sciences and Micro Finance.
In view of the forgoing and established career path, the author looks forward to engaging more in the area of teaching, research and outreach as per the mandate of an academic.