The development of a community, especially a poor community, hinges on interventions from development workers in government and non government organisations. In the recent past, microfinance has been strongly recommended as an intervention that could assist poor people to improve their quality of life by providing small amounts of money to initiate development enterprises. The microfinance services are provided through microfinance institutions. This study was aimed at establishing the role of microfinance in the socioeconomic development of women in a community. Mpigi Town Council in Uganda was the study area. Fifty respondents were interviewed and eight of these were employees of microfinance institutions and two worked as technical staff from Mpigi District Local Government. Twelve microfinance institutions were identified as providing services to the community in Mpigi Town Council. A variety of literature on microfinance in the developed world, developing world, Africa, Uganda and Mpigi Town Council was reviewed. It was noted that the year 2005 was identified as the International Year of Micro-credit during which its significance would be highlighted. The aim of the international year of microcredit was to improve on the knowledge, access and utilization of micro-credit by poor people in the developing world. During the literature review, it was evident that the literature on the impact of microfinance on the socio-economic development of women in Mpigi Town Council was lacking. By filling this gap, this research will be a referral document for other researchers and a resource book for microfinance institutions during the implementation of their programmes. The study was carried out using both quantitative and qualitative methods. Questionnaires and interviews were used to collect the data that was presented in tables, graphs and numbers to show the role played by microfinance in the socio-economic development of women in a community.The findings of the study reveal that microfinance institutions operating in Mpigi Town Council provide services like training and skills development, insured credit facilities and savings mobilisation, banking facilities, supervision and monitoring of the clients, provision of agriculture inputs like seeds and chemicals and physical items like animals (cows, goats, pigs, sheep etc). The services are particularly provided to women groups, salary earners, and individual women and men. The repayment of the credit facilities is usually through weekly and monthly instalments. The size of the loan depends on the MFI but ranges from one hundred thousand to millions of shillings. The security usually required is group collateral in case of groups, salary in case of salary earners and any other as deemed necessary for the individual by the MFI. The study established that women who accessed the loans from MFIs were able to improve their socio-economic status through starting up and or expanding investments and enterprises, paying school fees for their children, purchase of household items like furniture, land and solar installation, building of houses, confidence building, participation in leadership roles etc. The research also found out that women face some challenges in their access and utilization of the MFI services and these include; small amounts of money disbursed, diversion of funds, high interest rates, low returns on investment, short grace periods, unfavourable repayment schedules and risk of property confiscation by the MFI. The respondents recommended that the government should intervene, especially where interest rate is concerned and centralize it or make it uniform and also monitor the operations of the MFIs so that they offer adequate services to the women. As far as the MFIs are concerned, the respondents recommended that they should lower the interest rate, empathize with their clients, monitor and supervise more vigorously, collaborate with fellow MFIs, increase grace period and enlist the support of employers in the area. For the microfinance beneficiaries, the beneficiaries recommended that they should not divert the funds but should use them for the purpose intended. Furthermore, they should not move from one MFI to another. They ought to acquire the loan when they have some investment already, study the MFI before acquiring the services and support each other as a group to ensure that there is progress in the various undertakings. The results of the research have led to the assertion and affirmation that although the benefits may vary from one beneficiary to another and from one community to another, microfinance has in various ways played a significant role in the socio-economic development of women in Mpigi Town Council. This research report will be used as a document for other researchers and a resource book for the microfinance institutions in Mpigi Town Council. / Development Studies / M.A. (Social Science (Development Studies)

The development of a community, especially a poor community, hinges on interventions from development workers in government and non government organisations. In the recent past, microfinance has been strongly recommended as an intervention that could assist poor people to improve their quality of life by providing small amounts of money to initiate development enterprises. The microfinance services are provided through microfinance institutions. This study was aimed at establishing the role of microfinance in the socioeconomic development of women in a community. Mpigi Town Council in Uganda was the study area. Fifty respondents were interviewed and eight of these were employees of microfinance institutions and two worked as technical staff from Mpigi District Local Government. Twelve microfinance institutions were identified as providing services to the community in Mpigi Town Council. A variety of literature on microfinance in the developed world, developing world, Africa, Uganda and Mpigi Town Council was reviewed. It was noted that the year 2005 was identified as the International Year of Micro-credit during which its significance would be highlighted. The aim of the international year of microcredit was to improve on the knowledge, access and utilization of micro-credit by poor people in the developing world. During the literature review, it was evident that the literature on the impact of microfinance on the socio-economic development of women in Mpigi Town Council was lacking. By filling this gap, this research will be a referral document for other researchers and a resource book for microfinance institutions during the implementation of their programmes. The study was carried out using both quantitative and qualitative methods. Questionnaires and interviews were used to collect the data that was presented in tables, graphs and numbers to show the role played by microfinance in the socio-economic development of women in a community.The findings of the study reveal that microfinance institutions operating in Mpigi Town Council provide services like training and skills development, insured credit facilities and savings mobilisation, banking facilities, supervision and monitoring of the clients, provision of agriculture inputs like seeds and chemicals and physical items like animals (cows, goats, pigs, sheep etc). The services are particularly provided to women groups, salary earners, and individual women and men. The repayment of the credit facilities is usually through weekly and monthly instalments. The size of the loan depends on the MFI but ranges from one hundred thousand to millions of shillings. The security usually required is group collateral in case of groups, salary in case of salary earners and any other as deemed necessary for the individual by the MFI. The study established that women who accessed the loans from MFIs were able to improve their socio-economic status through starting up and or expanding investments and enterprises, paying school fees for their children, purchase of household items like furniture, land and solar installation, building of houses, confidence building, participation in leadership roles etc. The research also found out that women face some challenges in their access and utilization of the MFI services and these include; small amounts of money disbursed, diversion of funds, high interest rates, low returns on investment, short grace periods, unfavourable repayment schedules and risk of property confiscation by the MFI. The respondents recommended that the government should intervene, especially where interest rate is concerned and centralize it or make it uniform and also monitor the operations of the MFIs so that they offer adequate services to the women. As far as the MFIs are concerned, the respondents recommended that they should lower the interest rate, empathize with their clients, monitor and supervise more vigorously, collaborate with fellow MFIs, increase grace period and enlist the support of employers in the area. For the microfinance beneficiaries, the beneficiaries recommended that they should not divert the funds but should use them for the purpose intended. Furthermore, they should not move from one MFI to another. They ought to acquire the loan when they have some investment already, study the MFI before acquiring the services and support each other as a group to ensure that there is progress in the various undertakings. The results of the research have led to the assertion and affirmation that although the benefits may vary from one beneficiary to another and from one community to another, microfinance has in various ways played a significant role in the socio-economic development of women in Mpigi Town Council. This research report will be used as a document for other researchers and a resource book for the microfinance institutions in Mpigi Town Council. / Development Studies / M.A. (Social Science (Development Studies)

In the first part of the thesis I focus on credit markets in developing countries, and describe the competitive interaction between Microfinance Institutions (MFIs). <p>Microfinance has recently attracted a lot of attention from investors, politicians, scholars and, most of all, people working on development. As a results, a huge number of MFIs are being created all over the world so that, as of today, practitioners reckon that about 100 millions of customers are being served. Remarkably, about 67% of them are women. <p><p>The reason of this extraordinary effort is that Microfinance is considered the most promising development tool currently available. This belief is based on two important features of Microfinance: (i) It promises to be financially viable (and in some cases even profitable) since poor people have proven to be reliable clients. As a result, Microfinance is potentially a zero-cost development tool. (ii) It hinges on the entrepreneurial abilities of the poor. It is designed to help the poor to help themselves, in their own home countries, by allowing them to use their skills, ideas and potentials. This should progressively make developing countries independent of rich ones' help. <p><p>The growth of Microfinance has been so fast that many issues and related research questions are still not answered. In my thesis I try to address one of them, that I believe particularly important: the increase of competition between MFIs. As economic theory predicts, competition can have dramatic consequences in terms of borrower welfare, profitability of the institutions and, therefore, on the attractiveness of the business for potential investors, donors and entrants. I use the tools of industrial organization and contract theory to understand these effects, measure them, and give some interesting policy advice. <p><p>In the first paper, I analyze the effects of entry of a new MFI in a previously monopolistic microcredit market. In order to catch the salient features of financial markets in developing countries, I use a model of asymmetric information and assume that institutions can offer only one type of contract. I consider different behavioral assumptions for the MFIs and study their influence on equilibrium predictions. The model allows showing that competition can lead to equilibria in which MFIs differentiate their contracts in order to screen borrowers. This process can, unfortunately, make the poor borrowers worse off. Interestingly, the screening process we describe creates a previously unexplored source of credit rationing. I also prove that the presence in the market of an altruistic MFI, reduces rationing and, via this channel, affects positively the competitor's profit.<p><p>In the second paper, I study the effects of competition in those markets in which, due to the absence of credit bureaus, small entrepreneurs can simultaneously borrow from more than one institution. As in the first paper, I analyze an oligopolistic microcredit market characterized by asymmetric information and institutions that can offer only one type of contract. The main contribution is to show that appropriate contract design can eliminate the ex-ante incentives for multiple borrowing. Moreover, when the market is still largely unserved and particularly risky, a screening strategy leading to con- <p>tract differentiation and credit rationing is unambiguously the most effective to avoid multiple borrowing. The result of this paper can also be read as important robustness checks of the findings of my first paper. <p><p>In the last part of the thesis, I depart from the analysis of developing countries to consider, more generally, the corporate governance of financial infrastructures. The efficient functioning of financial markets relies more and more on the presence of infrastructures providing services like clearing, settlement, messaging and many others. The last years have been characterized by interesting dynamics in the ownership regime of these service providers. Both mutualizations and de-mutualizations took place, together with entry and exit of different players. <p><p>Starting from this observation, in the last paper (with Joachim Keller), we analyze the effects of competitive interaction between differently owned financial providers. We mainly focus on the incentives to invest in safety enhancing measures and we describe the different equilibrium market configurations. We use a model in which agents need an input service for the financial market they operate in. They can decide whether to provide it them selves by forming a Cooperative or outsource it from a Third Party Provider. We prove that the co-existence of differently governed infrastructures leads to a significant reduction in the investment in safety. In most cases, monopolistic provision is preferable to competition. Moreover, the decision rule used within the Cooperative plays a central role in determining the optimal market configuration. <p><p>All in all, throughout my thesis, I use the tools of industrial organization and contract theory to model the competitive interaction of the different actors operating in financial markets. Understanding the dynamics typical of developing countries can help in gaining a deeper comprehension of the markets in richer countries, and vice-versa. I am convinced that analyzing the differences and the similarities of financial markets in different regions of the world can be of great importance for economic theorists, in that it provides a counterfactual for the assumptions and the results on which our predictions and policy advices are based.<p> / Doctorat en Sciences économiques et de gestion / info:eu-repo/semantics/nonPublished