This dissertation consists of three essays exploring the heterogeneity of gender differences in behavior across contrasting societies. Are women naturally wired to behave differently than men or is it the social context in which the gender roles operate that motivate their behavior? I study this question in the contexts of risk, trust, and trustworthiness, moral hazard and repayment behavior in microfinance. I use the approach of conducting controlled field experiments in neighboring matrilineal and patrilineal societies in rural India. The two societies differ in gender roles but are comparable otherwise. Understanding the societal and cultural factors that drive gender differences in behavior helps to prescribe optimally-targeted policy designs. The first essay evaluates the universal policy of gender targeting to mitigate microfinance loan defaults and studies the reasons for such gender differences in default. I design and conduct microfinance field experiments with individual and group liability treatments in comparable matrilineal and patrilineal societies in India. I observe a reversal of gender effect on loan default across the two societies. I find that women have a lower default in the patrilineal society but higher default in the matrilineal society compared to their male counterparts. I also find that group liability leads to moral hazard among the individual group members but reduces overall default due to risk sharing among them. My results suggest that while women are better clients on average, a universal policy of gender targeting to reduce defaults in microfinance might be suboptimal. The second essay builds on the findings of the first essay that group liability contracts lead to moral hazard among the borrowers. In this essay, I evaluate the policy of gender targeting to mitigate moral hazard problems in microfinance and study the underlying reasons for such gender differences in moral hazard. I address this question by following a similar methodology to the first essay. My experimental design allows decomposing the different moral hazard channels through which default occurs in microfinance and interact them with gender and types of societies (matrilineal and patrilineal). I find that women in matrilineal society are more prone to exhibit moral hazard behavior than patrilineal women. Based on my findings, I argue that the gender differences in moral hazard is driven by the difference in social context, norms and the gender roles between the two societies. The final essay examines what drives gender differences in trust and trustworthiness, by conducting trust experiments in neighboring matrilineal and patrilineal societies in India. I find that on average the matrilineal subjects are more trusting as well as more trustworthy than the patrilineal subjects, but there is a significant heterogeneity in gender effects. Women in matrilineal society are both less trusting and less trustworthy than patrilineal women, compared to their male counterparts. This finding holds true even after controlling for risk preference and other individual characteristics. My findings suggest that societal structures are crucially linked to the observed gender differences in trust and trustworthiness.

M.A. / In South Africa, high unemployment rates, uneven distribution of opportunities and poverty are major concerns for the government. Poverty is defined as the deprivation of people due to the lack of access, and their right, to certain commodities. In 2004, close to 15,4 million people were living below the poverty line. In addition to this, in 2005, 53 percent of South Africans, equating to 16,4 million persons, were excluded from formal financial services. Microcredit has been advocated as a tool to reduce poverty. A world renowned microfinance model, the Grameen Bank model of Bangladesh has had success in not only reducing poverty, but also allowing poor people access to formal financial services. The bank has 7,93 million borrowers, with 97 percent being female clients, and one third of its borrowers have crossed the poverty line. Four organisations in South Africa have replicated this model. These organisations are the Small Enterprise Foundation, Marang Financial Services, The Women's Development Businesses, and the South African National Zakah Fund. These organisations have achieved in reaching 130,000 clients across South Africa, and extended over R1 billion in loans. However, only four of the nine provinces in the country have been infiltrated effectively. The impacts on these borrowers lives, and their households has been exceptional. Many of the families now have increased selfworth, a stable income, job security and access to credit in order to advance their businesses. In addition, Grameencredit has allowed thousands of South Africans access to legal, formal financial services. Thus, Grameencredit has been advocated to be an effective method in the fight against poverty.

High population growth rates, shrinking budgets, and urban migration are some of the factors that have led to an increase in demand for jobs in South Africa. This demand cannot be met by the formal enterprise sector and many job seekers have to be absorbed in the informal sector. With many people being unemployed it is important that they be helped to regain their self-esteem by being economically active. When people are economically active it leads to their empowerment and they are able to address their needs. Abbey (1999:3) indicates that strategies to combat poverty must concentrate on ensuring empowerment and creating opportunities for the poor. The informal sector consists of a large mass of the excluded such as women, the illiterate, the voiceless and the unrepresented. The people in this sector tend to lack the infrastructure, technical and managerial expertise or knowledge, financial resources, transportation and information that would make them successful. The informal sector plays a very important role in addressing the unemployment crisis and alleviating poverty for the majority of people in South Africa. Support for the informal sector can be through micro-lenders who can help finance the poor when formal lending institutions are not able to assist them (Kirsten, van Zyl and Vink, 1998:13). Women and children are the most vulnerable groups when it comes to poverty. The informal sector could help them become organised small entrepreneurs to enable them to provide a decent living for themselves and their families. But for many women it is difficult to find credit institutions that can help them to start their own businesses. Some of the reasons could be that they do not have a credit record, are unemployed and do not have collateral when they apply for credit. Micro-lenders can be of help as they are at times able to provide credit to groups of people who are not able to obtain credit from formal institutions to start their own businesses (Russell, 1995:33). This study was undertaken because research on the determinants of rural poverty emanates from the increasing concern to understand the reasons for the failure of development strategies in many Third World countries to reduce mass poverty. The living standards of the majority of the rural population in the Third World have failed to improve. In many countries there has been deterioration in their living standards, especially among the lower income groups. This has happened not only in countries where no significant growth in per capita income was achieved, but also in those countries or areas where growth has been rapid (Elkan, 1988:175). Increased poverty has been accompanied by increased under-utilisation of human labour. Development literature, on the whole, does not provide satisfactory explanations for this phenomenon. This has contributed to a failure to design and implement appropriate strategies and policies (Kirsten, van Zyl and Vink, 1998:11). Economists have been working on economic strategies for decades. The main purpose has been to tackle the issue of poverty by addressing the economic evils of the world. But despite all the impressive efforts by economists, politicians and other experts in different disciplines, the majority of the world's population continues to be trapped in absolute poverty: a condition of life characterised by diseases, illiteracy, high infant mortality, squalid surroundings and low life expectancy (Kirsten, van Zyl and Vink, 1998:14). / Prof. C.S. van der Waal

Magister Artium - MA / Providing international loans to governments in developing countries is seen as contributing to the upliftment and development of the Third World, according to a set of pre-determined criteria. From the neo-liberal capitalist perspective, this loan provision is widely conceived as one of the answers to poverty alleviation. Despite this, many Third World countries continue to be steeped in debt through these loans and stringent conditions. On a local level, micro-finance for small business development is seen as a tool for development and alleviating poverty. Millions of Rands have been made available in South Africa for micro-finance by government and backed by international financial institutions. As with international debt, already we are seeing a similar situation at the grassroots level of the poor and low income groups being indebted through micro-loans. They are in arrears with debt repayments, are over-indebted and their personal poverty is deepening as a result. In this thesis, I explore the different aspects impinging on low-income groups that are contributing to their indebted and poor situation. I explore the neo-liberal perspective, namely the GEAR strategy, as well as the micro-finance initiative against the backdrop of international and national debt tied to the IMF and World Bank. The glaring similarities between national and personal indebtedness are then examined. The focus then shifts to a micro-level case study of a group of low-income indebted people living in the Cape Metropolitan area. A range of elements from positivist, structuralist and humanist perspectives is employed to evaluate the circumstances of this sample. Both quantitative and qualitative research tools are used to construct a socio- economic profile of the indebted person. Qualitative methodologies, such as in-depth personal interviews and focus group discussions, are used to elicit information from the sample and respondents were selected through purposive sampling methods for this reason. Qualitative methodologies are employed in order to yield a deeper and more insightful understanding of the intricate web of personal indebtedness of the case study group. Quantitative methodologies included a questionnaire survey that was administered to the case study group and a stratified random sample was used to select participants. The summary profiling indicates that it is mainly single Xhosa-speaking women who are indebted and that all respondents are grant recipients. Further findings show that not only are respondents indebted to money-lenders and/or credit stores, but also to the local “spaza shop” and to the municipality in terms of their inability to pay for services as well. Serious concerns regarding lending practices, interest rates and absence of contracts were highlighted. Most disturbing is that it appears that a pattern of indebtedness is being established between generations. I argue that current legislation is inadequate and that the proposed new Consumer Credit legislation be translated into action otherwise the pattern of indebtedness will continue to persist. Further arguments are made for access to appropriate banking facilities and the importance of personal and national savings is stressed, if debt freedom and genuine development is to take place. I advocate for a re-thinking of the GEAR strategy, for a Basic Income Grant and for the building of popular movements to lobby and demand these changes and initiatives. The rationale put forward is that indebtedness is a symptom of the larger problem of poverty and unemployment; this therefore necessitates meaningful structural changes to address these overarching problems. / South Africa

Magister Artium (Development Studies) - MA(DVS) / This study assesses the challenges of microfinance and its prospects for poverty reduction in Maseru, the capital of Lesotho. It further assesses the challenges faced by the regulators of microfinance in this economy. In doing so, the study informs the policy makers in Lesotho about strategies that could be adopted to improve the microfinance industry in the country for the benefit of a large sector of the population that does not have access to formal lending channels. The study examined ten informal and formal microfinance groups, five representatives of the formal institutions and two from the Government: the Central Bank of Lesotho (CBL) and the Ministry of Finance and Social Development. The results of the study reveal some fundamental lessons for microfinance industry in Maseru, Lesotho, which could be applicable to other developing countries as well. First, microfinance in Maseru has had a positive change on the lives of its participants as articulated by the interviewees in this study. Second, it has promoted entrepreneurship and enabled its participants to open small and medium enterprises. The results of which has been a shift in consumption patterns of participants and poverty reduction. Despite the positive impacts, microfinance in Maseru has had challenges. These challenges include unlawful practices undertaken by the informal microfinance institutions such as seizure of the assets from those who default on their loans. The lending risks faced by formal institutions as well as regulation challenges by the CBL. The policy implication of this study is that the CBL and the Ministry of Finance need to require informal groups to register for licences to eliminate the level of corruption and unlawful practices experienced in the informal microfinance industry.

Philosophiae Doctor - PhD / Small, Medium and Micro Enterprises (SMMEs) play a significant role in an economy. Thus, governments all over the world concentrate on the development of the small business sector to endorse economic growth. SMMEs are a large contributor to the creation of job opportunities, improvement of the economy, and promote the effective use of regional resources which leads to the engineering of economic development and growth. SMMEs are an important source of jobs, entrepreneurial spirit and innovation and are thus vital to promoting competitiveness. However, despite the noted contribution of SMMEs, in many countries they face serious constraints, often resulting in failure. The constraints and economic environment have significant and unequal effects on SMMEs in different industries and in different locations. Constraints have been used, amongst other growth factors, to understand why some SMMEs fail to grow.This study lays the foundation for understanding the concept of SMME growth. SMME growth was examined in detail, and found to be heterogeneous in nature. The variation in measures used in SMME growth studies, the variation in growth indicators, the variation in the measurement of growth over time, and the variation in the characteristics of the SMMEs are all important features of SMME growth as a phenomenon. SMME growth models were examined to further understand why some firms survive and grow, and others fail. The models examined the problems SMMEs experience at different stages of growth, and the actions to be taken to overcome them as they progress from one stage to the next. Four growth models identified in the literature is discussed: stochastic models of firm growth, the resource-based view of firm growth, the motivation view on organizational growth, and the life cycle view of firm growth. The study then discussed the concept of constraints to growth, and conducted a literature review on the effect of some factors that act as constraints to SMME growth. It was concluded that constraints have a negative effect on SMME growth. The study also discussed various theoretical models on the financing of firms, starting with the traditional concept of the financial behaviour of firms. The relevancy of trade-off theory, agency theory, and the pecking order theory to SMME finance and capital structure is also examined. The theories explain the financial behaviour of enterprises, taking into account their different characteristics and problems. It is suggested by the theories that internal sources of finance such as equity, retained earnings, and venture capitalists represent the cheapest and best source of SMMEs capital structure. The study applied a quantitative research survey. The approach enabled the determination of the factors acting as constraints to SMME growth, and examination of how SMMEs could overcome these constraints to survive and grow. The approach chosen aims at investigating the moderating effect of microfinance on the relationship between financial constraints and SMME growth. The primary aim of this study was to explore and investigate the factors acting as constraints to SMME growth. The study investigated the effect of nine types of constraints on SMME growth namely: lack of access to finance, lack of skilled employees, competition, corruption, lack of professional financial advisors, lack of clear business plan, government rules and regulations, lack of awareness of financial services and assistance, and lack of government support. The study also empirically examined the moderating effect of microfinance on overcoming, avoiding or mitigating the financial constraints to SMME growth in South Africa, particularly in the province of the Western Cape. In order to assess the aim of the study, five secondary objectives were developed. The objectives were subdivided into seven hypotheses. The study found evidence that the lack of skilled employees, competition, corruption, lack of awareness of financial services and assistance, lack of professional financial advisors and lack of access to finance were significant constraints to SMME growth in South Africa. An important contribution this study makes is that microfinance provides a way to overcome or mitigate financial constraints for SMMEs. The negative effect of a lack of professional financial advisors and the lack of access to finance is reduced when SMMEs make use of microfinance source. As such this is an important finding that adds to existing studies on the role of constraints as well as to the literature on entrepreneurship in developing economies. However, contrary to the study hypothesis, microfinance does not moderate the relationship between the lack of awareness of financial services and assistance, and SMME growth. This can be attributed to the important role that has to be played by the microfinance institutions (MFI) and government agencies in ensuring that procedures are simple, financial products are demand driven, and clear and brief financial information is provided. These results imply that microfinance can play a positive role in SMME growth particularly for SMMEs that experience financial constraints. The study also suggests that MFIs and government agencies should provide more information to the public in particular to SMMEs. This study is not without its limitations. Firstly, the study is based on the province of the Western Cape, of South Africa. In a South African context, with its two tiered economy, the Western Cape is perceived to be a "developed" economy as opposed to other developing African countries. Further studies can be conducted in other countries or can include samples from other provinces to compare the results. Secondly, as this study provides only a measurement at one moment in time, we are not able to establish causal and longitudinal effects. However, the sample size of this study is favourable in comparison to other recent studies, and thus provides extended validity. Future studies that apply longitudinal designs are needed to establish the causality of the relationships found in this study.

In Kenya, like in many developing countries, Micro and Small Enterprises (MSEs) have become the main focus for achieving the much-needed social and economic development and alleviating poverty. However, their development has been hampered by lack of access to appropriate financial and related services. Micro financing has been seen as a viable alternative to providing financial services to entrepreneurs in the MSE sector. The focus of this study was to explore the role of MFIs in the development of MSEs and to see if there are ways in which this role can be enhanced to better support the growth of MSEs. Such enhancement would contribute greatly towards government efforts to foster social-economic development. The results of the research indicate that generally, MFIs appear to have positively influenced the growth of MSE in Kenya and have potential to further influence MSE growth. There were however a number areas that if paid attention to could enhance this influence. These include the need for MFIs to offer supportive services as opposed to merely credit facilities to MSEs and the need for government intervention by putting in place a suitable Act to regulate the operations of MFIs.

Over the past two decades, various development approaches and strategies have been devised by policymakers, international development agencies, nongovernmental organizations, and others aiming at poverty reduction in developing countries. Microfinance is a strategy that has become a hot development topic and increasingly popular since the early 1990s. A considerable amount of multi- and bilateral aid has been channeled into microfinance programs in the Third World with varying degrees of success. Microfinance involves providing financial services in the form of savings and credit opportunities to the working poor (Johnson & Rogaly, 1997). The impression left by many of the defenders of this ‘faith’ is that here lies a magic bullet that can help to raise the living standards of the poor and help them climb out of poverty. However, the real world is not so simple and information is scarce and limited to confirm the poverty reduction benefits accrued by microfinance interventions. To this effect, it may be argued that overselling the benefits of microfinance runs the risk of misunderstanding what realistically can be expected from microfinance. This can lead to disillusionment when microfinance fails to live up to its expectations. However, like all development interventions, donors, governments, and other interested parties demand evaluations and impact assessment studies to ascertain the achievements and failures of microfinance programs. This research paper focused on the assessment of microfinance efficacy on poverty reduction. The study employs indicator-based method of evaluation and draws on a new cross-sectional survey of nearly 610 households, some of which are served by microfinance institution. The results unraveled microfinance efficacy on poverty reduction and offer another set of risk management and coping options in times of shocks and disasters. Households that have access to the MFI programs had increased consumption and durable assets than the control group of non clients. The study concludes that microfinance makes a meaningful contribution to poverty reduction, significant improvements in livelihood and enables the participants to escape poverty. Therefore, MFI client households are relatively better off than non clients in as far as poverty levels are concerned.

The purpose of this study is to examine how the management of micro-finance institutions in Uganda has affected the performance indicators of these institutions, and whether or not the management of these institutions is responsible for their failure. The need to carry out this study arose as micro-finance institutions in Uganda failed to attain their planned performance indicators, to such a degree that most of them closed down. Although at their inception there was considerable entrepreneurial activity supported by a highly favourable government policy environment, their closure soon after establishment raised concern as to what caused them to fail. This study was encouraged by the observation that most of these institutions failed to realise their performance indicators as planned, but the underlying cause was not clear. Thus, the study focuses on establishing stakeholder perceptions of the management of the micro-finance institutions, and the relationship between their management (planning, implementation of planned programmes, and control) and their performance indicators, following the rationale of the functional and contingency paradigms of the concept of management. The study examines the way management dealt with these institutions‟ internal and external environments to influence their ability to realise their planned performance. The study is conducted using positivistic research methodology. This involved a collection of quantitative data from a sample of 454 respondents, including 64 managers, 177 employees, and 213 clients. Structured questionnaires were used to collect the data, and purposive and convenience sampling were applied to select the respondents. The respondents were selected from 56 randomly selected micro-finance institutions operating in Central Uganda and representing 75 percent of the country‟s operational institutions by December 2009. The data were analysed using the narrative, chi-square test, the ANOVA, factor analysis, and correlation and regression methods of analysis aided by the SPSS programme. The findings show that 79.2 percent of stakeholders (managers, employees, and clients) perceived that the management of their institutions was not conducted well in terms of planning, plan implementation, and control. Eighty-one (81) percent of both managers and employees and 83.4 percent of clients held the perception that the institutions failed xvi to achieve their performance indicators as planned. Furthermore, 81.7 percent of both managers and employees described their institutions‟ internal environment as largely defined by unsatisfactory supervision, and 66.9 percent of them revealed that their institutions‟ external environment was defined by family relations. These relations adversely affected the ownership, decision-making, employee recruitment, and deployment in the institutions. The findings also show that there were significant positive but weak relationships between management (planning, implementation, control, and dealing with the internal environment and the impact of the external environment) and the performance indicators of the institutions. The management of the institutions realised only 24.8 percent of their predicted performance indicators. Of the 13 null hypotheses that were formulated for this study, seven were rejected and the alternative hypotheses were accepted, while six were accepted. All the dimensions of the management of the micro-finance institutions in Uganda need to be developed if the performance of the institutions is to be improved and sustained to desired levels. It is suggested that large performance improvements will be realised by ameliorating all the dimensions of the institutions' management, while placing more emphasis on improving the following dimensions: the organisation of the institutions; the managing of their internal environment and the impact of their external environment; the conduct of their internal concurrent control; and the planning of their performance indicators and marketing, involving all the stakeholders, in particular the managers, employees, clients, Government, and the Uganda Micro-finance Forum, where necessary. Further research is recommended into other factors affecting the performance indicators of the institutions, since none of the management functions had explained them properly.

Microbusiness is recognized as an important tool for economic growth especially in less developed countries. It is supposed that a lack of access to capital is one of the most prominent constraints of microentepreneurs. To address this limitation, many forms of loan guarantee programs have been established. This paper examines what demands are placed on an effective guarantee structure in this field and how these aims are accomplished by the current guarantee funds. In conclusion, the access to capital is getting better recently in these countries. Guarantee funds have been growing, however, their importance is not so significant yet. Guarantee funds have a potential to draw an attention of investors to microlending but the cost of these schemes seems to be too high.