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Faculteit Economie en Bedrijfskunde
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Focus Area Finance and Development

Datum:20 november 2018
Finance and Development
Finance and Development

Below you can find a list of potential interesting topics for a master thesis for students who want to complete the Focus Area “Finance and Development” as part of the Msc Finance.  Note that all ideas need to be worked out further. Of course, this is just a limited list, much more can be done. It is advisable to have a careful look at the reading list  for the two Finance and Development Courses:  (1) International Finance and Development and (2) Inclusive Finance. The first course will provide a thorough background regarding “international finance and development”, dealing specifically with the relevance and importance of different types of capital flows between developed and developing countries. The second course deals in particular with the importance of financial inclusion within developing countries, and pays specific attention to the role of Microfinance. The group of topics below basically follows the main topics discussed during these lecture series. At the end of the document we list different datasets that can be used (note…much more is available).

International Finance and Development

I. Foreign Aid.

The literature on foreign aid is extensive and broad. There are also many datasets available that provide information about foreign aid flows to different countries, e.g. the World Bank published a lot of aid data.   Potential topics are:

  1. The impact of foreign aid on female empowerment. Many international finance institutions, such as the IMF, World Bank and bilateral donors have adopted gender mainstreaming in their development financing to achieve gender equality and female empowerment in all stages of development.  In the thesis one could examine what is the quantitative evidence on the effectiveness of gender-targeted projects of foreign aid using micro and/or macro level datasets that are publicly available. Also, one could look at the economic and non-economic dimensions of empowerment and analyze to what extent external financial interventions alter the local norms through incentives and increased opportunities.
  2. Can foreign aid be used to restrict migration to the EU, and if so, what should be done? Many people argue that in order to reduce migration flows to the EU it is important that welfare in developing countries improves. Foreign aid could help to achieve this. However, others argue that especially the richer people migrate, and hence, if foreign aid is successful, it will actually stimulate migration to the EU. In this thesis an overview of this discussion can be given. Moreover, the thesis may present new estimates on the impact of foreign aid on migration flows.
  3. Where does aid from emerging donors go to and why? Analysis for foreign aid allocation by western, traditional bilateral donors show that being poor is a necessary but not a sufficient condition to receive adequate amount aid. The aid allocation literature shows that aid from traditional western donors goes to commercial and political allies. The evidence on the allocation practices of emerging donors is rather scarce. The thesis could analyze how the emerging donors allocate their aid - is it need –based, trade-based, ideological or resource-seeking?
  4. Impact of aid on conflicts. Some authors argue that aid perpetuates conflict as it increases rent-seeking while others argue that aid can helps to recover from the conflict or financially empower the government to suppress the rebel groups. A possible thesis in this topic could look at specific sub-national country cases using geo-coded data on conflicts and aid and analyze conditions under which foreign aid can increase of decrease conflicts.


 II. Remittances


Potential topics are:

  1. The impact of remittances on financial inclusion. There is a small literature arguing that international remittances may improve financial inclusion. However, there is almost now empirical evidence for this. There are some papers looking at the impact of international remittances on financial development, measured with standard financial development measures, but none of these papers have considered to what extent international remittances will affect financial inclusion of the poor. In this theses new estimates can be made on the impact f international remittances on different dimensions of financial inclusion.
  2. Are international remittances counter or pro-cyclical? Do they reduce or amplify international crises?
  3. The impact of remittances on income distribution between countries. 
  4. How does an immigrant’s occupation status and wage affect the remittances they send to their origin country? Discuss, for example, in terms of the altruistic motive explaining remittances or the self-interested heritage motive. Are there reasons to suspect different results for different host countries, for instance, where the possibilities of family reunification may be different? Use a database that provides occupation status, level of income, and remittances, among immigrants. Preferably following the same migrants over time. 
  5. How does access to insurance and credit affect emigration rates in developing countries? Does this relationship differ from that between so called informal insurance, provided via social networks, and emigration? Discuss in terms of a diversification-of-risk motive for emigration at the household level. The Global Findex database should be relevant. 
  6. What is the impact of remittances on intra-household bargaining power? Does the receipt (and the management) of remittances have a positive effect on female empowerment? Imagine two possible scenarios: either the husband leaves the family (e.g. Mexicans working in agriculture in the US) or the wife leaves the family (e.g. Philippines working as nurses abroad). In both scenarios, the migrant member of the household sends money back home. How do these scenarios compare to families without (international) migrants with respect to female empowerment and intra—household bargaining power? Note: this will not only measure the impact of remittances on X, but the combined effect of remittances and emigration.
  7. Is there a difference in impact of internal versus international remittances on financial inclusion? Hypothesis: receiving international remittances contributes more to financial inclusion of households than receiving domestic remittances. Potentially disaggregate on the receiver side as well to determine the differential impact on rural and urban areas.
  8. What’s the impact of remittances on within-country inequality? 
  9. What is the impact of financial policy changes, e.g. due to IMF programs, on the amount, but also on the impact, of remittances in developing countries? First task would be to find (or to compile) a dataset on policy changes in the financial sectors of developing countries. Then, either perform cross-country study or investigate an individual country. Maybe there have been identical financial development programs implemented in various countries (need to define ‘identical program’): do these have different impacts? And if so, in which way?

 III. Capital flight

There is an ongoing discussion on “capital flight” from developing countries to developed countries. A master thesis could address for instance:


  1. The impact of financial liberalization in developing countries on capital flight. Several academics, and international institutions, plea for financial liberalizations (both domestically, as well as internationally) in developing countries. In the thesis one could examine to what extent these financial  liberalizations capital flight from developing countries. Financial liberalization may lead to more capital flight, as restrictions may be reduced. However, it may also dampen capital light if domestic growth start to improve. Results may also depend on the type of financial liberalizations. 
  2. The relationship between capital flight from African countries and financial inclusion. In this thesis new estimates on capital flight from African countries will be made. Using the newly developed dataset, estimates on the relationship between capital flight and financial inclusion will be made.

IV. Sovereign Debt Default. 

Recent work has found that renegotiating sovereign debt pre-emptively instead of waiting till after default leads to better outcomes for countries, for example, lower output losses. Potential topics that a master thesis can address in this context are:

  1.  What might be the good long-term effects of renegotiating debt pre-emptively? Does a country also have relatively better public finances, expenditures on infrastructure, health and education, if they renegotiate pre-emptively?
  2. What are the political or other institutions which ensure that countries renegotiate early in an optimal way?



 Inclusive Finance (and development)

 I. Microfinance

Regarding microfinance, many topics are relevant and may be interesting. Data at the microfinance institutions (MFIs) level is available via MIX Market. This enables research on “financial sustainability “and “outreach” of MFIs. As there are already many papers using MixMarket, some creativity is required to come up with a new topic. Potential topics are:

  1. The relationship between microfinance development and financial development of a country
  2. The relevance of adding microfinance to a (new) financial inclusion measure (i.e. combining an  existing financial inclusion measures with inforrmation about microfinance). Existing financial inclusion measures do not take into account microfinance. This is surprising as access to microfinance may be very important for financial inclusion. Thus, it may be relevant to construct a new financial inclusion indicator, combining the existing financial inclusion indicator with microfinance, and to conduct several analyses with this new index.
  3. Are estimates on financial sustainability and outreach of Microfinance robust? How “rigorous “are the results based on the MixMarket dataset. Almost all studies on “financial sustainability “and “outreach “of MFIs use  the MixMarket database. However, the MixMarklet database suffers enormously from attrition (many MFIs drop out of the data base) and entrance of new MFIs. This thesis can try to “replicate “some well-known studies done with MixMarket data, and examine to what extent the results still hold in case the estimates “control” for attrition biases. This will be a thesis topic for a student interested in doing a bit more “technical” (econometric) work.
  4. The impact of microfinance……(on female empowerment?).

Impact studies are very relevant, but require data availability. Fortunately, many authors now make their data publicly available. It may be relevant to look in recent development economics journals (Journal of Development Economics; American Economic Journal: applied) and look for recent publications on Microfinance impact. Using the existing data a replication study can be done


II. Financial Inclusion in general

Using the recent FinDec database (see below) many studies on the importance of financial inclusion can be done. For instance:

  1. Financial inclusion and Income distribution. In this thesis one could examine whether financial inclusion leads to a better income distribution in a country, using country level data (a panel analysis)
  2. Relationship between financial inclusion and financial stability.

Is there a relationship between financial inclusion and financial stability? In this thesis the aim is to test the relationship between different indicators of financial inclusion and  financial stability (measured e.g. by the z-score)


III. Fin Tech and Financial Inclusion

There is a lot of attention in the literature on innovative digital technologies (e.g. mobile banking and block chain applications) and to what extent  this improves financial inclusion and eventually sustainable economic growth. Different thesis topics may be relevant: 

  1. Impact of mobile banking on sustainable growth
  2. The relationship between Fin Tech and the Law system. It appears that the financial technology revolution mainly takes place in a few countries. Some authors argue that especially in so-called common law countries (law system based on UK and US law system) these innovations take place (note: Kenya is a common law country!), while in civil law countries these innovations o not seem to be relevant yet. The reason may be that the common law system much better protects investors against risk, and therefore are more willing to uptake new innovations. In this thesis, an empirical analysis  on the uptake of new financial technologies will be conducted. Specific attention will be given to the role of the law system.
  3. Which conditions need to be fulfilled before digital financial technologies will improve the position of the poor? In this thesis a survey will be given of the existing literature dealing with the conditions that need to be fulfilled before digital financial technologies will improve the poor. Moreover,   new empirical evidence on this issue will be given by estimating a relationship between sustainable development and access to fin tech, paying much attention to potential explanatory variables that may make this relationship positive.


Relevant publicly available datasets on Finance and Development:

  • World Bank Data. The World Bank Development Indicators (( for all type of “macro indicators” including Aid). It is also helpful to have a look at: This gives a stata module to access different World Bank data sets. The following link is also useful:
  • The Global Findex Database  ( This database provides a lot of information about different indicators for financial inclusion. The Global Findex database is the world’s most comprehensive data set on how adults save, borrow, make payments, and manage risk.
  • For the more traditional “financial development indicators at the macro level” the following link is important:
  • The MixMarket database for information on microfinance at the Microfinance Institutions Level (MFIs) ( This database can be used to conduct analyses on outreach and financial sustainability of MFIs. It doesn’t give information about “endusers” (the borrowers), but only accounting information on the institutions. Contact Robert Lensink for more information about how to access this database.
  • Human development Reports of the UNDP ( This dataset provides a lot of information on the Macro Level, especially on Human Development Indices (HDIs), but also on capital flows between countries.
  • For Migration and Remittances data, see….. For Migration and Remittances data, see, g., the Mexican Family Life Survey (MxFLS)  ( which is an on-going nationally representative longitudinal survey of individuals, households, families and communities. In addition to consumption, income, wealth, employment, marriage and fertility, the survey contains a module on crime and victimization as well migration histories. Respondents are followed if they move and interviewed in their new location. This includes people who move to the U.S. and those that return to Mexico. Data from the first two waves collected in Mexico are in the  public domain.
  • For specific Aid data, see…..
  • Many journals nowadays require from authors to upload the data sets they have used for the estimates in their article. See for instance the American Economic  Journal:  Applied  Economics  2015,  7(1), from which the datasets of 5 randomised controlled trails for the impact of microfinance can be obtained. A great source for such “replication data” is the J-PAL Dataverse hosted within the Harvard Dataverse ( as well as the Development Impact Evaluation (DIME) data (  More in general: it is advisable to try to find recently published datasets  used in “key papers” on issues related to “Finance and Development”. After downloading such a dataset, probably alternative analysis (or repetitions/ checking) of the original articles can be done.
  • For data on financial liberalization and “Financial Openness”  data can be found at: (the Chinn-Ito index). There is also an IMF database on financial reforms indices (From Abiad et al..), see Probably newer versions are available.
  • OECD Aid Statistics database on donor-recipient-project level as well as country programmable aid ( Also geo-coded datasets and replication datasets available at AIDDATA ( 
  • Data Sources
  • World Bank remittances data: annual in and out flows as well as bilateral flows (remittances from where to where)
  • Also the remittances indicators from the WDI database (World Bank)
  • Migration flows and stocks: UN DESA International Migrant Stock: the 2017 revision
  • Household and Micro Data (on migration and remittances)

       MxFLS: Mexican Family Life Survey

       MMP: Mexican Migration Project and related projects, e.g. LAMP Latin American Migration Project

       MAFE: Programme sur les migrations entre l’Afrique et l’Europe

       DHS: Demographic and Health Surveys some of them have migration and remittances modules.

       LSMS: Living Standards Measurement Study some of them contain migration and remittances modules

  • Browse the World Bank Microdata Catalogue for more migration and remittances related surveys
  • Collection of Data on David McKenzies website: