Microfinance can help home businesses recover from calamity in developing countries
Research by Elon University senior Michael Keenan finds that household businesses in Indonesia are more likely to cope with natural disasters and disease when they have access to banks that provide savings and loans.
By Sarah Collins ’18
A loan of a few hundred dollars might seem inconsequential in the United States, but for household businesses in developing nations, such a sum could make a world of difference following a drought or flood.
In Indonesia, where the majority of the population earns a living as small business owners, families who live in areas affected by natural disasters or widespread disease often are forced to sell business assets such as farming equipment, livestock or vehicles in order to make ends meet.
Recent research by Elon University senior Michael Keenan points to a possible solution for those families: microfinance loans.
The Business Fellow from Rocky Mount, North Carolina, has worked over the past year with Professor Steve DeLoach in the Department of Economics to analyze data in the Indonesian Family Life Survey from 1993-2007, a longitudinal survey of households and small businesses.
Microfinance entails small loans for those without access to traditional banking. Over time, these modest loans have the ability to bolster a developing nation’s economy, decreasing poverty levels and providing a promising financial outlook for the future.
“From a policy standpoint, this is significant because if microfinance is proven to be an effective tool for supporting entrepreneurs, policymakers can subsidize banks that are willing to give microloans,” said Keenan, an economics and mathematics double major.
Keenan became interested in economic development after studying abroad during his junior year in Costa Rica. While in Central America, he worked with the non-profit El Centro de Estudios para la Paz, or Center for Peace Studies, to propose an entrepreneurship program for local prisoners.
The program teaches prisoners basic finance, accounting and marketing skills, and then encourages them to develop business proposals. Pitching this program opened Keenan’s eyes to the potential of economic education in less-privileged economies.
He returned to campus and soon applied to Elon’s Summer Undergraduate Research Experience.
“Over the course of the summer, Michael matured in his economic understanding and confidence in doing research,” DeLoach said. “Now if you saw us interact, you would really feel that we are colleagues who are collaborating rather than a teacher who is instructing his protégé.”
Keenan plans to present his economics research in February at the Issues in Political Economy Conference in Washington, D.C.
In conjunction with his microfinance research, Keenan also undertook a research project in mathematics. He worked with Assistant Professor Chad Awtrey to develop a new method of calculating symmetries of polynomial roots in an effort to increase the efficiency of existing algorithms.
He travelled to Seattle in January to present his mathematics research at the Joint Mathematics Meeting, and he will share the same research in April at the National Conference for Undergraduate Research in Asheville.
Following in the footsteps of his older brother and Elon alumnus Connor Keenan ’14, Michael Keenan was familiar with the university before he even applied. When he was selected for the Business Fellows program, Keenan was eager to gain hands-on experience in the field of economics.
The graduate of Rocky Mount Academy plans to attend graduate school to pursue a degree in developmental or applied economics. He recently received acceptance to the Erasmus School of Economics in Rotterdam, Netherlands; Tilburg University in Tilburg, Netherlands; the Barcelona Graduate School of Economics in Barcelona, Spain and Johns Hopkins University.
Keenan is the son of Steve and Jane Keenan of Rocky Mount, North Carolina.