The goal of this course is to develop a conceptual and practical skillset required to operate a micro-finance initiative. It begins by identifying problems with current micro-finance practices, then delves into specific issues to do with behaviour, regulation, business, and poverty alleviation. Essays and discussions on theories and real-world examples are complemented with two hands-on assignments: coding and running an automated lending platform (which won the 2019 Finance & Blockchain Hackathon at Imperial College London) and designing a feasible business proposal for a new micro-finance enterprise.
I. A case against micro-finance: Identifying challenges and limitations
- Abdul Latif Jameel Poverty Action Lab (J-PAL), ‘Microcredit: impacts and limitations’, J-PAL Policy Insights, 2018.
- Duvendack Maren, Richard Palmer-Jones, James G. Copestake, Lee Hooper, Yoon Loke and Nitya Rao, ‘What is the evidence of the impact of microfinance on the well-being of poor people?', London: EPPI-Centre, 2011.
- Karnani, Anil, ‘Microfinance Misses its Mark’, Stanford Social Innovation Review, Summer 2007.
- Loiseau, Justin and Claire Walsh, ‘Where Credit is Due’, J-PAL and IPA Policy Bulletin, 2015.
- Sengupta, Rajdeep and Craig P. Aubuchon, ‘The Microfinance Revolution: An Overview’, Federal Reserve Bank of St. Louis Review, 98 (2008), 9–30.
II. Personal finance in low-income countries
1. Financial literacy
- Cole, Shawn, Thomas Sampson and Bilal Zia, ‘Prices or Knowledge? What Drives Demand for Financial Services in Emerging Markets?', The Journal of Finance, 66 (2011), 1933–1967.
- Klapper, Leora, Annamaria Lusardi and Peter van Oudheusden, ‘Financial Literacy Around the World: Insights from the S&P Global FinLit Survey’, GFLEC report, 2015.
- Lusardi, Annamaria and Olivia S. Mitchell, ‘Financial Literacy around the World: an Overview’, Journal of Pension Economics and Finance, 497 (2011), 497–508.
2. Financial protection and regulation
- Brealey, Richard A., Stewart C. Myers and Franklin Allen, Principles of Corporate Finance, McGraw-Hill/Irwin, 2011, 944 pp. [Part One, chapters 5 and 6].
- Campbell, John Y., Howell E. Jackson, Brigitte C. Madrian and Peter Tufano, ‘Consumer Financial Protection’, Journal of Economic Perspectives, 25 (2011), 91–114.
- Consumer Financial Protection Bureau, ‘Ability-to-Repay and Qualified Mortgage Rule’, CFPB report, 2014.
- Financial Conduct Authority, ‘Rent-to-own and alternatives to high-cost credit. Feedback on CP18/12 and consultation on a price cap’, Consultation Paper CP18/35, 2018.
- Video from a panel at the American Finance Association on Making the World a Better Place: Innovations in Financial Inclusion, Literacy, and Development, 2019.
3. Financial technology and innovation
- Di Maggio, Marco and Vincent W. Yao, ‘FinTech Borrowers: Lax-Screening or Cream-Skimming?', working paper, 2018.
- EY, ‘Global FinTech Adoption Index 2019’, EY report, 2019.
- Hill, John, FinTech and the Remaking of Financial Institutions, Academic Press, 2018, 386 pp.
- Lewis, John, ‘Should Peer-to-Peer Lenders Exist In Theory?', Bank Underground (Bank of England), 2018.
- Nolan, Anthony R. G., Joseph A. Valenti and Christopher H. Bell, ‘Certain Compliance Risks in Marketplace/Peer-to-Peer/Online Lending’, K&L Gates, 2016.
- Thuiner, Sohella, Banks of the Future, Springer International Publishing, 2015, 229 pp.
III. The future of financial inclusion
- Demirgüç-Kunt, Asli, Leora Klapper, Dorothe Singer, Saniya Ansar and Jake Hess, ‘The Global Findex Database 2017: Measuring Financial Inclusion and the Fintech Revolution’, World Bank Group, 2018.
- Duvendack, Maren and Philip Mader, Impact of Financial Inclusion in Low- and Middle-income Countries: A Systematic Review of Reviews, Campbell Systematic Review, 2019.
- Global Partnership for Financial Inclusion, G20 High-Level Principles for Digital Financial Inclusion, World Bank Group, 2016.
IV. SME finance in low-income countries
1. The credit gap for SMEs
- Abraham, Facundo and Sergio L. Schmukler, ‘Addressing the SME Finance Problem’, Research & Policy Briefs (World Bank Group), 9 (2017).
- Ayyagari, Meghana, Thorsten Beck and Asli Demirgüç-Kunt, ‘Small and Medium Enterprises Across the Globe’, Small Business Economics, 29 (2007), 415–434.
- Beck, Thorsten and Robert Cull, ‘SME Finance in Africa’, Journal of African Economies, 23 (2014), 583–613.
- Beck, Thorsten, Asli Demirgüç-Kunt and Ross Levine, ‘SMEs, Growth, and Poverty: Cross-country Evidence’, Journal of Economic Growth, 10 (2005), 199–229.
- Beck, Thorsten and Asli Demirgüç-Kunt. ‘Small and Medium-size Enterprises: Access to Finance as a Growth Constraint’, Journal of Banking and Finance, 30 (2006), 2931–2943.
- Beck, Thorsten, Asli Demirgüç-Kunt and Vojislav Maksimovic, ‘Financing Patterns Around the World: Are Small Firms Different?', Journal of Financial Economics, 89 (2008), 467–487.
- de la Torre, Augusto, Juan Carlos Gozzi, and Sergio L. Schmukler, ‘Innovative Experiences in Access to Finance: Market-friendly Roles for the Visible Hand?', Latin American Development Forum, World Bank, 2017.
- King, Robert G. and Ross Levine, ‘Finance, Entrepreneurship and Growth: Theory and Evidence’, Journal of Monetary Economics, 32 (1993), 513–542.
- Stein, Peer, Oya Pinar Ardic and Martin Hommes, ‘Closing the Credit Gap for Formal and Informal Micro, Small, and Medium Enterprises’, International Finance Corporation report, 2013.