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Accesss to Credit

Weekly wire: The global forum

Roxanne Bauer's picture

World of NewsThese are some of the views and reports relevant to our readers that caught our attention this week.

Economists tested 7 welfare programs to see if they made people lazy. They didn't.
Vox
For as long as there have been government programs designed to help the poor, there have been critics insisting that helping the poor will keep them from working. But the evidence for this proposition has always been rather weak. And a recent study from MIT and Harvard economists makes the case even weaker. Abhijit Banerjee, Rema Hanna, Gabriel Kreindler, and Benjamin Olken reanalyzed data from seven randomized experiments evaluating cash programs in poor countries and found "no systematic evidence that cash transfer programs discourage work." Attacking welfare recipients as lazy is easy rhetoric, but when you actually test the proposition scientifically, it doesn't hold up.

COP21: 'Fireworks' expected as new climate text published
BBC
A critical "clean" draft text has been published at UN climate talks here in Paris after delays. This new version, 29 pages long, marks the first time the French presidency of the meeting has pulled together an outline of a deal. The new draft has significantly reduced the options on many of the key questions after days of negotiations. One observer warned that there could be "fireworks" if countries are unhappy with the compromises proposed. Last Saturday, negotiators from 195 countries agreed on a weighty 48-page document, the summation of four years of talks that began in Durban in 2011. That document was handed to the French president of COP21, Laurent Fabius. Over the past few days he has asked pairs of ministers from around the world to try to advance aspects of the document. 

The Microfinance Mystery

Martin Ravallion's picture

For the last two years, there has been a mystery about the evidence supporting the past favorable assessments of the scope for reducing poverty using microfinance instruments such as the famous Grameen Bank (GB). The chances for many poor people to benefit from access to this form of credit rest, in part, on solving that mystery.

To understand the mystery we need to go back to an influential paper by Mark Pitt and Shahidur Khandker (PK), published in the 1998 volume of the Journal of Political Economy. PK documented research supported by the World Bank—research that came to provide the most cited scholarly evidence yet to support the view that microcredit helps reduce poverty.