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Migration facilitates the flow of information between countries, thereby reducing informational frictions that potentially hamper cross-country financial flows. Using a gravity model, migration is found to be highly correlated with financial flows from the migrant's host country to her home country. The correlation is strongest where information problems are more acute (e.g., between culturally more distant countries), for asset types that are more informational sensitive, and for the type of migrants that are most able to enhance the flow of information on their home countries, namely, skilled migrants. These differential effects are interpreted as evidence for the role of migration in reducing information frictions between countries.
Gravity Models --- Information Asymmetries --- International Financial Flows --- International Loans --- Migration
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The digital agriculture revolution holds a promise to build an agriculture and food system that is efficient, environmentally sustainable, and equitable, one that can help deliver the Sustainable Development Goals. Unlike past technological revolutions in agriculture, which began on farms, the current revolution is being sparked at multiple points along the agrifood value chain. The change is driven by the ability to collect, use, and analyze massive amounts of machine-readable data about practically every aspect of the value chain, and by the emergence of digital platforms disrupting existing business models. All this allows for drastically reduced transaction costs and pervasive information asymmetries that plague the agrifood system. The success of the digital transformation, however, is not guaranteed as the risks it brings are numerous, including those related to data governance and inadequate competition within and between digital platforms. What's Cooking: Digital Transformation of the Agrifood System investigates how digital technologies can accelerate the transformation of the agrifood system by increasing efficiency on the farm; improving farmers' access to output, input, and financial markets; strengthening quality control and traceability; and improving the design and delivery of agriculture policies. It also identifies a key role for the public sector in maximizing the benefits of this process while minimizing its risks, through enabling an innovation ecosystem featuring open datasets, digital platforms, digital entrepreneurship, digital payment systems, and digital skills and encouraging equitable technology adoption.
Digital Divide --- Digital Platforms --- Digital Technologies --- Efficiency --- Environmental Sustainability --- Equity --- Food System --- Information Asymmetries --- Innovation Ecosystem --- Transaction Costs
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How do borrowers respond to improvements in a lender's ability to punish defaulters? This paper reports the results of a randomized field experiment in rural Malawi that examines the impact of fingerprinting borrowers in a context where a unique identification system is absent. Fingerprinting allows the lender to more effectively use dynamic repayment incentives: withholding future loans from past defaulters while rewarding good borrowers with better loan terms. Consistent with a simple model of borrower heterogeneity and information asymmetries, fingerprinting led to substantially higher repayment rates for borrowers with the highest ex ante default risk, but had no effect for the rest of the borrowers. The change in repayment rates is driven by reductions in adverse selection (smaller loan sizes) and lower moral hazard (for example, less diversion of loan-financed fertilizer from its intended use on the cash crop).
Access to credit --- Access to Finance --- Bankruptcy and Resolution of Financial Distress --- Borrower --- Collateral --- Credit market --- Credit markets --- Debt Markets --- Defaulters --- Economic Theory & Research --- Finance and Financial Sector Development --- Information asymmetries --- International bank --- Lender --- Lenders --- Loan --- Loan sizes --- Loan terms --- Macroeconomics and Economic Growth --- Microfinance --- Moral hazard --- Profitability --- Public policy --- Repayment --- Repayment rates --- Rural credit
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Mexico's compensatory education program provides extra resources to primary schools that enroll disadvantaged students in highly disadvantaged rural communities. One of the most important components of the program is the school-based management intervention known as AGEs. The impact of the AGEs is assessed on intermediate school quality indicators (failure, repetition and dropout), controlling for the presence of the conditional cash transfer program. Results prove that school-based management is an effective measure for improving outcomes, based on an over time difference-in-difference evaluation. Complementary qualitative evidence corroborates the veracity of such findings.
Curriculum --- Curriculum Development --- Disability --- Disadvantaged Students --- Education --- Education for All --- Educational Reform --- Effective Schools and Teachers --- Information Asymmetries --- Learning --- Learning Environment --- Learning Outcomes --- Literature --- Papers --- Primary Education --- Research --- School --- School Quality --- Schools --- Secondary Education --- Social Protections and Labor --- Student --- Student Learning --- Teacher --- Teachers --- Tertiary Education --- Training --- University
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Liquidity and solvency have been called the "heavenly twins" of banking (Goodhart, Charles, 'Liquidity Risk Management', Financial Stability Review - Special Issue on Liquidity, Banque de France, No. 11, February, 2008). Since these "twins" interact in complex ways, it is difficult - particularly at times of crisis - to distinguish between them, especially in the presence of information asymmetries (Information asymmetry occurs when one party has more or better information than the other, creating an imbalance of power, giving rise to adverse selection and moral hazard ). An insolvent bank can be liquid or illiquid, and a solvent bank may be at times illiquid. In the latter case, insolvency is not far away, since banking is grounded in information and confidence, and it is confidence which in the end determines liquidity. In other words, liquidity is very much endogenous, determined by the general condition of a bank, as well as the perception of it by the public and market participants. Dealing with liquidity risk is more challenging than dealing with other risks, since liquidity is the result of all the operations of a bank and it is fundamentally a relative concept which compares segments of the balance sheet on the asset and liability sides. It does not deal with absolutes, like arguably the concept of capital and it explains why there is not an internationally recognized "Liquidity Accord". This Working Paper addresses key concepts like market and funding liquidity and basic tools to address liquidity issues like cash flows, liquidity gaps and some selected financial ratios. It aims at providing an introductory guide to risk assessment and management, and provides useful and practical guidelines to undertake liquidity assessments which could prove useful in preparing Financial Assessment Programs (FSAPS) in member countries of the Bretton Woods institutions.
Balance sheet --- Banking system --- Bankruptcy and Resolution of Financial Distress --- Banks and Banking Reform --- Cash flows --- Central bank --- Currencies and Exchange Rates --- Debt Markets --- Deposits --- Emerging Markets --- Finance and Financial Sector Development --- Financial Stability --- Information asymmetries --- Information asymmetry --- International Bank --- Lender --- Liability --- Liability sides --- Liquidity --- Liquidity Risk --- Market participants --- Maturity --- Moral hazard --- Private Sector Development --- Risk Management --- Solvency --- Withdrawal
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This paper estimates the effect of school-based management on student performance in the Philippines using the administrative dataset of all public schools in 23 school districts over a 3-year period, 2003-2005. The authors test whether schools that received early school-based management interventions (training in school-based management and direct funding for school-based reforms) attained higher average test scores than those that did not receive such inputs. The analysis uses school-level overall composite test scores (comprising all subject areas tested) and test scores in three separate subject areas: English, math, and science. Their preferred estimator, difference-in-difference with propensity score matching, shows that the average treatment effect of participation in school-based management was higher by 1.5 percentage points for overall composite scores, 1.2 percentage points for math scores, 1.4 percentage points for English scores, and 1.8 percentage points for science scores. These results suggest that the introduction of school-based management had a statistically significant, albeit small, overall positive effect on average school-level test scores in 23 school districts in the Philippines. The paper provides a first glimpse of the potential for school-based management in an East Asian context based on available administrative data. The authors suggest that the next order of research is to answer policy-related questions regarding the reforms: what aspects of the reform lead to desired results; are there differential effects across subpopulations; and what are the potential downsides to the reforms? The Philippines is embarking on a nation-wide implementation of school-based management and the authors recommend that mechanisms for rigorous evaluations be advanced simultaneously. Such evaluations should not only provide more accurate estimates of the effectiveness of the reforms, but also help answer policy-related questions regarding design and implementation of those reforms in different socio-cultural contexts.
Curriculum --- Curriculum design --- Curriculum development --- Education --- Education For All --- Education sector --- Educational planning --- Educational quality --- Employment --- Information asymmetries --- Learning --- Literature --- Papers --- Primary Education --- Researchers --- Schools --- Secondary Education --- Student achievement --- Student population --- Teacher --- Teacher training --- Teachers --- Teaching and Learning --- Tertiary Education --- Textbooks --- University department
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This paper describes important trade-offs that microfinance practitioners, donors, and regulators navigate. Drawing evidence from large, global surveys of microfinance institutions, the authors find a basic tension between meeting social goals and maximizing financial performance. For example, non-profit microfinance institutions make far smaller loans on average and serve more women as a fraction of customers than do commercialized microfinance banks, but their costs per dollar lent are also much higher. Potential trade-offs therefore arise when selecting contracting mechanisms, level of commercialization, rigor of regulation, and the extent of competition. Meaningful interventions in microfinance will require making deliberate choices - and thus embracing and weighing tradeoffs carefully.
Access to Finance --- Banks --- Banks and Banking Reform --- Collateral --- Debt Markets --- Deposit --- Emerging Markets --- Entrepreneurs --- Finance and Financial Sector Development --- Financial Access --- Financial services --- Information asymmetries --- Interest rates --- International Bank --- Loan --- Loan size --- Loan sizes --- Microfinance --- Microfinance institutions --- Operating costs --- Private Sector Development --- Profitability --- Remittance --- Rural Development --- Rural Finance --- Savings --- Transaction costs --- Transactions costs
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This paper reviews different econometric methodologies to assess the relationship between financial development and growth. It illustrates the identification problem, which is at the center of the finance and growth literature, using the example of a simple Ordinary Least Squares estimation. It discusses cross-sectional and panel instrumental variable approaches to overcome the identification problem. It presents the time-series approach, which focuses on the forecast capacity of financial development for future growth rates, and differences-in-differences techniques that try to overcome the identification problem by assessing the differential effect of financial sector development across states with different policies or across industries with different needs for external finance. Finally, it discusses firm-level and household approaches that allow analysts to dig deeper into the channels and mechanisms through which financial development enhances growth and welfare, but pose their own methodological challenges.
Access to Finance --- Debt Markets --- Economic development --- Economic growth --- Economic Theory and Research --- External finance --- Finance and Financial Sector Development --- Financial development --- Financial institutions --- Financial sector development --- Information asymmetries --- International Bank --- Macroeconomics and Economic Growth --- Payment services --- Poverty Reduction --- Pro-Poor Growth --- Science and Technology Development --- Statistical and Mathematical Sciences --- Transaction costs
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Microfinance, the provision of small individual and business loans, has witnessed dramatic growth, reaching over 150 million borrowers worldwide. Much of its success has been attributed to overcoming the challenges of information asymmetries in uncollateralized lending. Yet, very little is known about the optimal contract structure of such loans - there is substantial variation across lenders, even within a particular setting. This paper exploits a plausibly exogenous change in the liability structure offered by a microfinance program in India, which shifted from individual to group liability lending. The analysis finds compelling evidence that contract structure matters: for the same borrower, required monthly loan installments are 6 percent less likely to be missed under the group liability setting, relative to individual liability. In addition, compulsory savings deposits are 19 percent less likely to be missed under group liability contracts.
Access to Finance --- Bankruptcy and Resolution of Financial Distress --- Borrower --- Collateral --- Commercial banks --- Debt Markets --- Deposit Insurance --- Emerging markets --- Expenditure --- Finance and Financial Sector Development --- Financial market --- Financial support --- Income inequality --- Information asymmetries --- International bank --- Lenders --- Liability --- Loan --- Microcredit --- Microfinance --- Optimal contract --- Provision of credit --- Savings deposits --- Transaction --- Transaction costs
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This paper estimates the effect of school-based management on student performance in the Philippines using the administrative dataset of all public schools in 23 school districts over a 3-year period, 2003-2005. The authors test whether schools that received early school-based management interventions (training in school-based management and direct funding for school-based reforms) attained higher average test scores than those that did not receive such inputs. The analysis uses school-level overall composite test scores (comprising all subject areas tested) and test scores in three separate subject areas: English, math, and science. Their preferred estimator, difference-in-difference with propensity score matching, shows that the average treatment effect of participation in school-based management was higher by 1.5 percentage points for overall composite scores, 1.2 percentage points for math scores, 1.4 percentage points for English scores, and 1.8 percentage points for science scores. These results suggest that the introduction of school-based management had a statistically significant, albeit small, overall positive effect on average school-level test scores in 23 school districts in the Philippines. The paper provides a first glimpse of the potential for school-based management in an East Asian context based on available administrative data. The authors suggest that the next order of research is to answer policy-related questions regarding the reforms: what aspects of the reform lead to desired results; are there differential effects across subpopulations; and what are the potential downsides to the reforms? The Philippines is embarking on a nation-wide implementation of school-based management and the authors recommend that mechanisms for rigorous evaluations be advanced simultaneously. Such evaluations should not only provide more accurate estimates of the effectiveness of the reforms, but also help answer policy-related questions regarding design and implementation of those reforms in different socio-cultural contexts.
Curriculum --- Curriculum design --- Curriculum development --- Education --- Education For All --- Education sector --- Educational planning --- Educational quality --- Employment --- Information asymmetries --- Learning --- Literature --- Papers --- Primary Education --- Researchers --- Schools --- Secondary Education --- Student achievement --- Student population --- Teacher --- Teacher training --- Teachers --- Teaching and Learning --- Tertiary Education --- Textbooks --- University department
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