Where NGOs go and do not go?
AbstractIn this paper, we investigate the role of output market imperfections in constraining the microfinance program to mitigate credit market imperfections. We develop a model in which output market imperfections increase operating costs for NGOs and create barriers for producers to market their goods. Therefore, NGOs engage in locations having good physical infrastructure and better productive and marketing opportunities to minimize operating cost and maximize loan repayment. Using data from northern Bangladesh, we find strong support for the model predictions. NGO coverage in a village, measured both by percentage of NGO member households and number of NGOs working, decreases with distance of the village from marketplace and increases with adoption of modern irrigation method and soil quality. NGOs do not consider poverty incidence in the village. The results have important implications for development economics in general and impact assessment of microfinance program in particular.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 27185.
Date of creation: Dec 2010
Date of revision:
Microfinance; location choice; NGO; market imperfections; poverty;
Find related papers by JEL classification:
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-12-18 (All new papers)
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