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This study investigates the effect of demographic factors on formal and informal borrowing households in rural Fujian Province. The study tests whether credit constraint affects rural farmers’ welfare in the studied region, using a probit regression and endogenous switching regression model to analyse data collected in 2017 from 960 farm households. Analysis shows that age, poverty, household size, and farmland size operate to constrain credit in formal borrowing. Results also indicate that level of education, farm land size and age have significant impacts on rural household borrowing from informal sources. The results from the endogenous switching model approach suggest that credit constraint does have a significant impact on rural farmers’ consumption and welfare in Fujian province.

Access to finance is essential for fostering financial inclusion, improving household economic well-being, and stimulating economic growth. However, if not prudently managed, it can become a double-edged sword, increasing the risk of over-indebtedness, particularly among low-income households. This paper investigates the borrowing behavior of rural households in Egypt, exploring whether it is motivated by the optimization of intertemporal consumption or reflects deeper financial vulnerabilities. The study enhances our understanding of rural households’ financial behavior in Egypt and contributes to the literature by introducing perceived general self-efficacy as a key behavioral factor. The paper employs a quantitative methodology using a probit analysis of the Egypt Labor Market Panel Survey to explore the factors affecting the demand for formal loans, informal borrowing, and Rotating Saving and Credit Associations (RoSCAs). The results show that informal credit plays a dominant role in meeting rural households’ financial needs. A significant positive relationship between formal and informal credit suggests they are complementary. Elderly, married, less educated, and poorer individuals are more likely to seek both forms of credit, with employment stability being a key differentiator. Self-efficacy also has a significant positive effect. No significant regional differences are observed, except in the case of informal borrowing, with rural households in Upper Egypt showing less reliance, suggesting that social image may influence financial behavior in this region. The results suggest that demand for credit is driven by economic and financial vulnerability of rural households. The paper highlights key policy implications. First, to enhance participation in formal credit market, credit policies should offer more affordable, tailored credit relevant to starting a business rather than financing consumption, part of which is conspicuous. Second, the low self-efficacy among the rural poor suggests a need for policies that combine credit access with financial literacy and debt management support to prevent over-indebtedness.

Although access to financing in Pakistan is expanding quickly, it is two to four times lower than regional benchmarks. Half of Pakistani adults, mostly women, do not engage with the financial system at all, and only 14 percent have access to formal services. Credit for small- and medium-size enterprises is rationed by the financial system. The formal microfinance sector reaches less than 2 percent of the poor, as opposed to more than 25 percent in neighboring countries. Yet it is the micro- and small businesses, along with remittances, that help families escape the poverty trap and participate in the economy. 'Bringing Finance to Pakistan's Poor' is based on a pioneering and comprehensive survey and dataset that measures the access to financial products by Pakistani households. The survey included 10,305 households in all areas of the country, excluding the tribal regions. The accompanying CD contains summary statistics. The authors develop a picture of access to and usage of financial services across the country and across different population groups, and they identify policy and regulatory priorities. Reform measures in Pakistan have been timely, but alone are not enough; financial institutions have lagged behind in adopting technology, segmenting customer bases, diversifying products, and simplifying processes and procedures. Gender bias and low levels of financial literacy remain barriers, as is geographical remoteness. However, the single strongest cause of low financial access is lack of income—not location, education, or even gender. 'Bringing Finance to Pakistan's Poor' will be of great interest to readers working in the areas of business and finance, economic policy, gender and rural development, and microfinance.

Banking the Poor explores level and determinants of financial access in 54 countries, mostly in Africa. It collects information from two sources: central banks and leading commercial banks in each surveyed country. It explores associations between countries' banking policies and practices and their levels of financial access, measured in terms of the numbers of bank account per thousand adults. It builds on the previous work measuring financial access through information from regulators, from banks, and also from users' perspectives in household surveys.

In autumn 2000, the World Bank's board approved the first ever strategy for the new social protection and labor sector, and in January 2001, the sector published the strategy. The subtitle, from safety net to springboard, indicated the World Bank's move toward a broader understanding of poverty reduction and the relationship of risk to poverty. Because risks and access to appropriate risk management instruments matter for poverty reduction and development, the strategy proposed a new conceptual framework - social risk management that will review and reform existing interventions and propose new ones to better assist the vulnerable in addressing the many risks to which they are exposed. After seven years of implementation, it was time to review the strategy and work of the areas of selected core competence: labor market, social insurance (in particular pensions), social safety nets, social funds, disability and development, and risk and vulnerability analysis. The strategic position, its development, and the results by the sector since the launch of its strategy were reviewed and presented to the World Bank's committee on development effectiveness at the end of 2007. The review included a stocktaking of the analytical work and lending operations in each of the six core competence areas. The result of this review and the six stocktaking papers are presented in this publication. They reveal the progress that the World Bank has made in understanding the importance of social risk management for poverty reduction and the critical contribution it makes to equitable and sustainable growth.

This paper investigates the impact of the COVID-19 pandemic and related policy measures on livelihoods in urban South Africa. Using qualitative research methods, we analyse two rounds of semi-structured phone interviews, conducted between June and September 2020 in the township of Khayelitsha, Cape Town. We contextualise these by presenting a snapshot of the nationwide dynamics using quantitative panel data. Our findings describe how the shock of the COVID-19 pandemic has deepened the economic vulnerability which preceded the crisis. Survivalist livelihood strategies were undermined by the economic disruption to the informal sector, while the co-variate nature of the shock rendered social networks and informal insurance mechanisms ineffective, causing households to liquidate savings, default on insurance payments, and deepen their reliance on government grants. In addition, the impact of the pandemic on schooling may deepen existing inequalities and constrain future upward mobility.

Building on rational choice institutionalism theory and Williamson’s (J Econ Lit 38(3): 595–613, 2000) four-level social analysis framework, we investigate the influence of the informal institution of social trust on debt contract design in an international setting. Using a sample of non-U.S. firms that issue bonds in the U.S. debt market, we find that Yankee bond creditors impose fewer covenants on bond issuers domiciled in countries with a high degree of social trust. We further show that the inverse relationship between debt covenants and the informal institution of social trust is more pronounced for firms from countries with weak formal institutions, as well as for firms with poor corporate governance and greater information opacity. These findings are robust to endogeneity tests, within-country analysis, various empirical models and measures of trust, and alternative hypotheses. We also show that, while a lower level of informal social trust is associated with higher borrowing costs, this relationship weakens when formal covenants are added to the debt contract (i.e., a substitution effect). Our paper contributes to the international business literature by providing new insights into the role of informal institutions (social trust) in cross-border debt contracting.

Using plant-level data for Brazilian manufacturing firms, this paper provides evidence that government control over banks leads to significant political influence over the real decisions of firms. I find that firms eligible for government bank lending expand employment in politically attractive regions near elections. These expansions are associated with additional (favorable) borrowing from government banks. Further, these persistent expansions take place just before competitive elections, and are associated with lower future employment growth by firms in other regions. The analysis suggests that politicians in Brazil use bank lending to shift employment towards politically attractive regions and away from unattractive regions.

This article seeks to analyse the informal borrowing sources of the poor as well as the purposes for borrowing. The obsession on characterising the poor as financially excluded fails to grasp their active financial lives. This article emphasises how relations of credit/debt are rooted in complex social and cultural forces. It is precisely because of the social embeddedness of credit that family finance, though interest-free, is not a first resort. Similarly, credit in kind from shopkeepers, though critical to consumption smoothing, is detested by some people. Also, it is argued that the involvement of the traditional leader in repayment enforcement in informal financial groups challenges the economistic narrative that attempts to separate credit from cultural norms.

Mobile money is a recent innovation that provides financial transaction services via mobile phone, including to the unbanked global poor. The technology has spread rapidly in the developing world, “leapfrogging” the provision of formal banking services by solving the problems of weak institutional infrastructure and the cost structure of conventional banking. This article examines the evolution of mobile money and its important role in widening financial inclusion. It explores the channels of economic influence of mobile money from a micro perspective, and critically reviews the empirical literature on the economic impact of mobile money. The evidence convincingly suggests that mobile money fosters risk-sharing, but direct evidence of the promotion of welfare and saving is still mostly rather less robust.