File2-page111 - Lecture 6 Credit and Microfinance Readings...

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Unformatted text preview: Lecture 6 Credit and Microfinance Readings Tables and figures in this lecture are taken from: Chapters 14 of Ray (1998) Morduch, J. (1999). The microfinance promise. Journal of Economic Literature, 37(4):15691614. 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, LSE. Introduction 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 108 ...
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