Unformatted text preview: Lecture 6
Credit and Microﬁnance
Tables and ﬁgures in this lecture are taken from:
Chapters 14 of Ray (1998)
Morduch, J. (1999). The microﬁnance promise. Journal of Economic
Burgess, R. and Pande, R. (2003). Do Rural Banks Matter?: Evidence
from the Indian Social Banking Experiment. STICERD, LSE.
Class based on Burgess, R. and Pande, R. (2003). Do Rural Banks
Matter?: Evidence from the Indian Social Banking Experiment. STICERD,
Why is access to ﬁnance important?
Finance the shortfalls in consumption – consumption smoothing
Finance ongoing production – expand production opportunities
Appropriate public policy response to this is complicated by the fact that
the extent of credit rationing in such situations / countries may be endogenously determined – informational and enforcement problems as opposed
to lack of funds may underlie credit rationing
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