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GDN FUNDED PAPERS
Awards and Medals Competition 2011 - Layoffs and Urban Poverty in the State-owned Enterprise Communities in Shaanxi Province, China
Project :
Author : Zhiming Cheng
Date : 2011
Description : This paper applies a mixed methods approach that combines qualitative and quantitative methods to examine urban poverty in China’s state-owned enterprise communities where laid-off workers concentrate. A sequential explanatory model using interviews, Participatory Poverty Assessments and community household survey on textile and military industries in Shaanxi Province of northwestern China shows that low-income households suffered multidimensional disadvantages. Qualitative techniques have helped to reveal the hidden aspects of poverty while statistical tools have captured holistic information on the communities. These approaches together (Q-squared) consider both the outsiders’ and insiders’ views on the laid-off poor and benefit the making of effective anti-poverty policies.
Development on the Move: Measuring and Optimising Migration’s Economic and Social Impacts
Project : Global Research Project
Author : Laura Chappell, Ramona Angelescu-Naqvi, George Mavrotas, Dhananjayan Sriskandarajah
Date : 2010
Description : This report captures the main results from Development on the Move: Measuring and Optimising Migration’s Economic and Social Impacts, a joint project of the Global Development Network (GDN) and the Institute for Public Policy Research (ippr). We believe that this project is a unique and important contribution to the study of one of the most important phenomena of our time: international migration. It is a ground-breaking global research project that has gathered new, comparative qualitative and quantitative data about migration’s development impacts. It has done so through an ambitious methodology involving primary research in seven countries, across six continents. The researchers have spoken to close to a hundred thousand people and gathered comparable in-depth data from almost 10,000 households.
Japanese Award for Outstanding Research on Development 2010 - Climate Analysis in Rural Hometowns (RICART): Piloting a tool on rural hometown investing by overseas migrants
Project :
Author : Alvin P Ang and Jeremaiah Manuel Opiniano
Date : 2010
Description : This paper introduces a research tool called the Remittance Investment Climate Analysis in Rural Hometowns (RICART). RICART will determine if overseas migrants and their households, both of whom have established a relationship that is rooted in their rural birthplaces, will invest in their birthplaces or not. Given data in the Philippines (a migrant-sending country) that overseas remittance incomes of migrant households have outstripped the total incomes of local government units [Institute for Migration and Development Issues, 2008], local government units running rural areas will find RICART an aid to surveying the income and investment landscapes of their areas. These pieces of information will then be aided by determining remittance incomes of townmates abroad. Theoretically, RICART aims to contribute to the literature on overseas migration and local development a new framework, a Remittance Investment Climate framework, that explains what a rural hometown needs to attract overseas migrants’ investments.
Japanese Award for Outstanding Research on Development 2010 - Impact of External Capital Flows on MFI performance
Project :
Author : Bibek Ray Chaudhuri and T. P. Ghosh
Date : 2010
Description : Microfinance has shown a lot of promise in delivering the much needed products specifically designed for the poor. In many countries Microfinance has reached a state where commercialization of operations seems to be the way forward. This phenomenon has given rise to a debate between outreach and efficiency of Microfinance Institutions (MFIs). It is alleged by many studies that commercialization is causing a ‘mission drift’ in the sense that MFIs are increasingly sacrificing their goal of outreach in favor of efficiency. In this study we propose to estimate the effect of external capital flows on MFI performance. MFI performance includes both outreach and efficiency variables. We also propose to include other variables like domestic sources of finance, financial development indicators related to the countries where the MFIs are located and lending methodology used by the MFIs as the other indicators of MFI performance. This cross-country study is complemented by a case study on MFIs in India. A survey of MFIs was carried out to understand their financing decisions. Choice of capital structure by MFIs in India was then linked to the determinants of capital structure like assets, growth, profitability, objectives of MFIs, regulatory environment etc. The study seeks to find the affect of external capital flows and other sources of finances on MFI performance as well as through some light on choice of capital structure at the MFI-level. In the first stage we would try to estimate that through a cross-country study. In the second stage we tried to probe deeper into the determinants of fund choice of MFIs in India. The objective in the second part was to understand the determinants of fund-choice at the MFI-level through a survey of its decision-makers. Results confirm that efficiency and outreach are indeed negatively related and capital structure dominated by debt significantly negatively affects outreach whereas its impact on efficiency is not significant. Foreign debt is seen to have negatively affected outreach and positively affected inefficiency. Analysis of primary data reveals that for young MFIs, NGOs, and ones with lower return on assets the probability of feeling financially constrained is significantly higher than not feeling constrained. For MFIs having higher return on assets, portfolio at risk and feeling financially constrained increases the chances of getting apex body funds. In case of foreign funds higher competitive pressure, operational expenses ratio, loan growth significantly increases the chances of getting foreign funds against not getting any, whereas, higher Roa (Return on assets) significantly reduces the chances of getting foreign funds than not getting. Results point out to the fact that MFIs performing well financially may not be seeking funds from outside the country whereas same is not true for MFIs feeling the pressure due to competition, higher operational expenses and higher loan growth. Regarding choice of capital our study shows that equity is preferred over debt by MFI executives feeling growth and size as constraints under present regulation but competition and profitability under a no-regulation scenario. Further it has been found that FDI has significantly negatively affected operational self sufficiency of MFIs in our sample.
Japanese Award for Outstanding Research on Development 2010 - Banking Crises and Reversals in Financial Reforms
Project :
Author : Petar Valeriev Stankov
Date : 2010
Description : A number of countries have gone through banking crises since the early 1970s. This work links those episodes with the patterns of various financial reforms within those countries. As banking crises are endogenous, crisis exposures to major trading partners help identify the causality between crises and reforms. Consistent with the previous literature, the results of this work demonstrate that systemic banking crises reverse most financial reforms. However, they do so with various lags, whereas the impact of non-systemic crises is largely insignificant. The main results remain unaffected after numerous robustness checks. A rich set of policy implications is discussed which could help establish a growth-enhancing financial regulatory framework after banking crises.
Awards and Medals Competition 2010 - Innovative sources of development finance: The role of land in financing India’s large cities and comparisons with China
Project :
Author : Kala Seetharam Sridhar, A. Venugopala Reddy
Date : 2010
Description : Given the recent financial crisis has hit many donor countries and is threatening their pre-crisis commitment to allocate more aid in order to accelerate progress with the Millennium Development Goals (MDGs), in this paper, we have made an attempt to assess the potential of land as a municipal financing tool in four Indian cities and compare this with the available evidence from China, to enable better public service delivery and attainment of the MDGs. We study the institutional arrangements for land use between the urban development authorities and municipal corporations in India‘s cities and find that the responsibilities are fragmented and unclear. The urban development authorities, being state government entities, are much better endowed with resources than municipal corporations. We find in the case of Indian cities that if revenues from land leasing and sales by the urban development authorities were to accrue to municipal corporations, there is a huge range in the addition to municipality revenues that could result. We find that there could be an increase in municipality‘s total revenues to the extent of 33 percent, own source revenues to the extent of 90 percent, and property tax revenues to the extent of nearly 930 percent, should revenues from land leasing and sales by the urban development authorities accrue to municipal corporations. There is also enough local control over resources to be spent. In China, cities have more autonomy than their Indian counterparts in terms of urban infrastructure which is no longer treated as a ‗charity‘ and payment is required for the use of scarce land resources and infrastructure access. Hence major institutional changes have to be brought about in India‘s cities and finances to enable attainment of the MDGs.
Awards and Medals Competition 2010 - Do financial reforms complementarity and reforms sequence matter for international capital inflows?
Project :
Author : Zorobabel Bicaba
Date : 2010
Description : As economic reforms are mutually interdependent, a liberal policy package needs internal coherence. How can a coherent reform strategy be achieved for a well-balanced and functional economic system? In this paper, we analyze the relationship between financial reforms coherence and international capital inflows (foreign direct investments (FDI) and portfolio investments). We consider a package of eight financial reforms, comprising interest rate deregulation, credit ceiling and directed-credit programs liberalization, elimination of banking sector entry barriers, privatization of state owed banks, development of security markets and banking sector supervision measures. Complementarity is measured through the reciprocal of the Herfindahl-Hirschman concentration index. The results suggest that the manner with which financial reforms are implemented matters. Particularly, complementarity increases FDI inflows by 0.10%. Moreover, this effect depends on the location of the countries on the distribution of financial reforms level. Indeed, the countries located above the median value of financial reform level experience larger FDI and portfolio investment inflows than others. Finally, when privatization of state owned banks and the adoption of a capital adequacy ratio based on the Basle I standard occur after other preliminary financial reforms, the returns to complementarity are higher. In others words, a developed and relatively safe domestic financial system attracts more FDI and portfolio investments than a developed but unsafe financial system.
Awards and Medals Competition 2010 - The Impact of Microfinance on Rural Poor Households’ Income and Vulnerability to Poverty: Case Study of Makueni District, Kenya
Project :
Author : Joy Kiiru
Date : 2010
Description : Microfinance has become very important in global poverty reduction debates. The popular assumption is that enabling poor households access to credit helps households begin micro entrepreneurship which would enable them improve their incomes and eventually escape poverty. Evidence from research so far has been scanty, and many results have been highly contested. The main objective of the thesis was to analyze the impact of microfinance on household income as well as measure household vulnerability to poverty after access to microfinance. The study is an experimental case of Makueni district where participants in microfinance programmes and non participant households were studied over time; thus yielding a rich pooled data for analysis. On integrating time dynamics in the analysis, the results indicate a positive and significant impact of microfinance on household income. To this end the thesis argues that there is a role of microfinance on the improvement of household incomes. The thesis also re asserts that providing affordable financial services to the rural population still remains to be an important component of development strategy. On the other hand the thesis emphasizes that there is need to come up with innovative microfinance institutions that are supportive of their own role in assets accumulation and wealth creation for their clients. This will involve innovative targeting of potential clients, as well as streamlined microfinance regulations to protect their clients. In particular the study cautions that the ability of households to begin informal sole micro entrepreneurships should not be assumed to be adequate for the improvement of household income. There is need to create a policy framework to spur growth not only in the micro enterprises but also in the overall rural economy that would lead to the creation of employment opportunities and an increment in the agricultural output. This is quite a big task to accomplish and may require more than one particular policy intervention. In essence this calls for both private (microfinance) and public partnerships to create the environment where such poverty reduction objectives could be realized.
Awards and Medals Competition 2010 - Effects of a Mortgage Interest Rate Subsidy: Evidence from Colombia
Project :
Author : Marc Hofstetter, Miguel Urrutia and Jorge Tovar
Date : 2010
Description : The government intervention in the construction sector as a way to boost the economy has been a constant in Colombia for the past 90 years. This paper explicitly tests the impact of the most recent of such interventions: a subsidy to the mortgage interest rate. Our results show that the subsidy boosted mortgage loans by around 38%. However, we also find that real interest rates went up by 1.25%, i.e., there has been an incomplete pass through of the subsidy to the costumers. We estimate the pass-through of such intervention to be in the range of 68% to 70%.
Awards and Medals Competition 2010 - Which Foreigners Are Worth Wooing? A Meta-Analysis of Vertical Spillovers from FDI
Project :
Author : Tomas Havranek and Zuzana Irsova
Date : 2010
Description : The principal argument for subsidizing foreign investment is the assumed spillover of technology to local firms. Yet researchers report mixed results on spillovers. To examine the phenomenon in a systematic way, we collected 3,626 estimates from 57 empirical studies on between-sector spillovers and reviewed the literature quantitatively. Our results indicate that model misspecifications reduce the reported estimates, but that journals select relatively large estimates for publication. The underlying spillover to suppliers is positive and economically significant, whereas the spillover to buyers is insignificant. Greater spillovers are generated by investors that come from distant countries and that have only slight technological advantages over local firms. In addition, greater spillovers are received by countries that have underdeveloped financial systems and that are open to international trade.
 
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