Shawn Cole is an associate professor in the Finance Unit at Harvard Business School, where he teaches a second-year elective course “Business at the Base of the Pyramid.”
His research examines corporate and household finance in emerging markets, with a focus on banking, microfinance, insurance, and the relationship between financial development and economic growth. He has worked in China, India, Indonesia, South Africa, and Vietnam. He is an affiliate of the National Bureau of Economic Research, MIT’s Jameel Poverty Action Lab, and the Bureau for Research and Economic Analysis of Development.
He has taught FIN1 and FIN2 in the core curriculum, as well various executive education courses, and currently teaches a portion of the PhD-level development class in the department of Economics.
Before joining the Harvard Business School, Professor Cole worked at the Federal Reserve Bank of New York in the economic research department. He currently serves on the Boston Federal Reserve's Community Development Research Advisory Council, and has served as an external advisor to the Gates Foundation, and as the chair of the endowment management committee of the Telluride Association, a non-profit educational organization.
He received a Ph.D. in economics from the Massachusetts Institute of Technology in 2005, where he was an NSF and Javits Fellow, and an A.B. in Economics and German Literature from Cornell University.
Featured Work
-
Do Voters Demand Responsive Governments? Evidence from Indian Disaster Relief
Using rainfall, public relief, and election data from India, we examine how governments respond to adverse shocks and how voters react to these responses. The data show that voters punish the incumbent party for weather events beyond its control. However, fewer voters punish the ruling party when its government responds vigorously to the crisis, indicating that voters reward the government for responding to disasters. We also find evidence suggesting that voters only respond to rainfall and government relief efforts during the year immediately preceding the election. In accordance with these electoral incentives, governments appear to be more generous with disaster relief in election years. These results describe how failures in electoral accountability can lead to suboptimal policy outcomes.
-
Liability Structure in Small-Scale Finance: Evidence from a Natural Experiment
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. We find evidence that the lending model matters: for the same borrower, required monthly loan installments are 11 percent less likely to be missed under the group liability setting, relative to individual liability. In addition, compulsory savings deposits are 20 percent less likely to be missed under group liability contracts.
-
Incentivizing Calculated Risk-Taking: Evidence from an Experiment with Commercial Bank Loan Officers
This paper uses a series of experiments with commercial bank loan officers to test the effect of performance incentives on risk-assessment and lending decisions. We first show that, while high-powered incentives lead to greater screening effort and more profitable lending, their power is muted by both deferred compensation and the limited liability typically enjoyed by credit officers. Second, we present direct evidence that incentive contracts distort judgment and beliefs, even among trained professionals with many years of experience. Loans evaluated under more permissive incentive schemes are rated significantly less risky than the same loans evaluated under pay-for-performance.
Publications
-
Article
| World Bank Economic Review
| Forthcoming
Liability Structure in Small-Scale Finance
Fenella Carpena, Shawn Cole, Jeremy Shapiro and Bilal Zia
Microfinance, the provision of small individual and business loans, has experienced dramatic growth, reaching over 150 million borrowers worldwide. Much of the success of microfinance has been attributed to attempts to overcome the challenges of information asymmetries in uncollateralized lending. However, very little is known about the optimal contract structure of these loans, and 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. We find evidence that the lending model matters: for the same borrower, the required monthly loan installments are 11 percent less likely to be missed under the group liability setting in comparison with individual liability. In addition, compulsory savings deposits are 20 percent less likely to be missed under group liability contracts.
-
Article
| American Economic Journal: Applied Economics
|
Barriers to Household Risk Management: Evidence from India
Shawn A. Cole, Xavier Gine, Jeremy Tobacman, Petia Topalova, Robert M. Townsend and James Vickery
Why do many households remain exposed to large exogenous sources of non-systematic income risk? We use a series of randomized field experiments in rural India to test the importance of price and non-price factors in the adoption of an innovative rainfall insurance product. Demand is significantly price sensitive, but widespread take-up would not be achieved even if the product offered a payout ratio comparable to U.S. insurance contracts. We present evidence suggesting that lack of trust, liquidity constraints, and limited salience are significant non-price frictions that constrain demand. We suggest contract design improvements to mitigate these frictions.
-
Article
| Journal of Development Economics
|
Do Voters Demand Responsive Governments? Evidence from Indian Disaster Relief
Shawn Cole, Andrew Healy and Eric Werker
Using rainfall, public relief, and election data from India, we examine how governments respond to adverse shocks and how voters react to these responses. The data show that voters punish the incumbent party for weather events beyond its control. However, fewer voters punish the ruling party when its government responds vigorously to the crisis, indicating that voters reward the government for responding to disasters. We also find evidence suggesting that voters only respond to rainfall and government relief efforts during the year immediately preceding the election. In accordance with these electoral incentives, governments appear to be more generous with disaster relief in election years. These results describe how failures in electoral accountability can lead to suboptimal policy outcomes.
Keywords: Political Elections;
System Shocks;
Natural Disasters;
Policy;
Motivation and Incentives;
Public Opinion;
India;
-
Article
| Journal of Finance
|
Prices or Knowledge? What Drives Demand for Financial Services in Emerging Markets?
Shawn A. Cole, Thomas Sampson and Bilal Zia
Financial development is critical for growth, but its micro-determinants are not well understood. We test leading theories of low demand for financial services in emerging markets, combining novel survey evidence from Indonesia and India with a field experiment. We find a strong correlation between financial literacy and behavior. However, a financial education program has modest effects, increasing demand for bank accounts only for those with low levels of education or financial literacy. In contrast, small subsidies greatly increase demand. A follow-up survey confirms these findings, demonstrating that the newly opened accounts remain open and in use two years after the intervention.
Keywords: Price;
Knowledge;
Demand and Consumers;
Emerging Markets;
Banks and Banking;
Education;
Finance;
Behavior;
Service Operations;
Financial Services Industry;
India;
Indonesia;
-
Article
| JMR, Journal of Marketing Research
|
Marketing Complex Financial Products in Emerging Markets: Evidence from Rainfall Insurance in India
Sarthak Gaurav, Shawn A. Cole and Jeremy Tobacman
Recent financial liberalization in emerging economies has led to the rapid introduction of new financial products. Lack of experience with financial products, low levels of education, and low financial literacy may slow adoption of these products. This article reports on a field experiment that offered an innovative new financial product, rainfall insurance, to 600 small-scale farmers in India. A customized financial literacy and insurance education module communicating the need for personal financial management and the usefulness of formal hedging of agricultural production risks was offered to randomly selected farmers in Gujarat, India. The authors evaluate the effect of the financial literacy training and three marketing treatments using a randomized controlled trial. Financial education has a positive and significant effect on rainfall insurance adoption, increasing take-up from 8% to 16%. Only one marketing intervention, the money-back guarantee, has a consistent and large effect on farmers' purchase decisions. This guarantee, comparable to a price reduction of approximately 40%, increases demand by seven percentage points.
Keywords: Financial Instruments;
Developing Countries and Economies;
Literacy Characteristics;
Education;
Innovation and Invention;
Personal Finance;
Agribusiness;
Marketing;
Decisions;
Demand and Consumers;
Emerging Markets;
Insurance;
Gujarat;
-
Article
| Review of Economics and Statistics
|
Financial Development, Bank Ownership, and Growth. Or, Does Quantity Imply Quality?
Shawn A. Cole
Keywords: Finance;
Growth and Development;
Banks and Banking;
Ownership;
Quality;
-
Article
| American Economic Journal: Applied Economics
|
Fixing Market Failures or Fixing Elections? Elections, Banks and Agricultural Lending in India
Shawn A. Cole
Keywords: Failure;
Voting;
Banks and Banking;
Agribusiness;
India;
-
Journal Article
| Quarterly Journal of Economics
|
Remedying Education: Evidence from Two Randomized Experiments in India
A. Banerjee, Shawn A. Cole, E. Duflo and L. Linden
This paper presents the results of two randomized experiments conducted in schools in urban India. A remedial education program hired young women to teach students lagging behind in basic literacy and numeracy skills. It increased average test scores of all children in treatment schools by 0.28 standard deviation, mostly due to large gains experienced by children at the bottom of the test-score distribution. A computer-assisted learning program focusing on math increased math scores by 0.47 standard deviation. One year after the programs were over initial gains remained significant for targeted children, but they faded to about 0.10 standard deviation.
Keywords: Competency and Skills;
Literacy Characteristics;
Teaching;
Performance Improvement;
India;
-
Article
| Journal of Economic History
|
Capitalism and Freedom: Slavery and Manumission in Louisiana, 1725-1820
Shawn A. Cole
Keywords: Economic Systems;
Society;
Louisiana;
-
Chapter
| Banking the World: Empirical Foundations of Financial Inclusion
| Forthcoming
Valuing Financial Literacy
Shawn Cole, Thomas Sampson and Bilal Zia
Keywords: Valuation;
Finance;
Knowledge Use and Leverage;
Citation: Cole, Shawn, Thomas Sampson, and Bilal Zia. "Valuing Financial Literacy." In Banking the World: Empirical Foundations of Financial Inclusion. Cambridge, MA: MIT Press, forthcoming.
-
Chapter
| International Handbook on the Economics of Corruption
| 2006
Evidence from the Firm: A New Approach to Understanding Corruption
Shawn A. Cole and Anh Tran
Due to its clandestine nature, most of what we understand about corruption comes from survey evidence and self-reported perceptions of corruption: this limits both the range of questions that can be asked and the precision of answers that can be provided. This chapter proposes a new lens to understand corruption, using internal records collected from firms that pay bribes. We examine widespread corruption in three industries in an Asian developing country: procurement, pharmaceutical sales, and construction. Using data of real bribes, we provide new estimates of corruption and study its relationship with organizational ownership.
Citation: Cole, Shawn A., and Anh Tran. "Evidence from the Firm: A New Approach to Understanding Corruption." In International Handbook on the Economics of Corruption, edited by Susan Rose-Ackerman, 408–427. Edward Elgar Publishing, 2006.
-
Chapter
| Borrowing to Live: Consumer and Mortgage Credit Revisited
| 2008
Where Does It Go? Spending by the Financially Constrained
Shawn A. Cole, Peter Tufano and John Thompson
-
Chapter
| India's and China's Recent Experience with Reform and Growth
| 2005
Bank Financing in India
Shawn A. Cole, A. Banerjee and E. Duflo
Keywords: Banks and Banking;
Financing and Loans;
Banking Industry;
India;
Citation: Cole, Shawn A., A. Banerjee, and E. Duflo. "Bank Financing in India." In India's and China's Recent Experience with Reform and Growth, edited by Wanda Tseng, and David Cowen. Palgrave Macmillan, 2005.
-
Chapter
| India Policy Forum
| 2004
Banking Reform in India
Shawn A. Cole, A. Banerjee and E. Duflo
Keywords: Banks and Banking;
Governing Rules, Regulations, and Reforms;
Government and Politics;
Business and Government Relations;
Developing Countries and Economies;
Banking Industry;
India;
Citation: Cole, Shawn A., A. Banerjee, and E. Duflo. "Banking Reform in India." In India Policy Forum. Vol. 1, edited by Arvind Panagariya, Barry Bosworth, and Suman Bery, 277–323. Brookings Institution Press, 2004.
-
Working Paper
| HBS Working Paper Series
| 2013
How Does Risk Management Influence Production Decisions? Evidence from a Field Experiment
Shawn Cole, Xavier Gine and James Vickery
Weather is a key source of income risk for many firms and households, particularly in emerging market economies. This paper studies how an innovative risk management instrument for hedging rainfall risk affects production decisions among a sample of Indian agricultural firms, using a randomized controlled trial approach. We find that the provision of insurance induces farmers to shift production towards higher-return but higher-risk cash crops, particularly amongst more-educated farmers. Our results support the view that financial innovation may help mitigate the real effects of uninsured production risk. In a second experiment we elicit willingness to pay for insurance policies that differ in their contract terms, using the Becker-DeGroot-Marshak mechanism. Willingness-to-pay is increasing in the actuarial value of the insurance, but substantially less than one-for-one, suggesting that farmers' valuations are inconsistent with a fully rational benchmark.
-
Working Paper
| HBS Working Paper Series
| 2013
High School and Financial Outcomes: The Impact of Mandated Personal Finance and Mathematics Courses
Shawn Cole, Anna Paulson and Gauri Kartini Shastry
Financial literacy and cognitive capabilities are convincingly linked to the quality of financial decision-making, influencing savings, stock-picking, and avoidance of outright financial mistakes. Yet, there is little evidence that education intended to improve financial decision-making is successful. Using plausibly exogenous variation in exposure to state-mandated personal finance and mathematics training in high school, affecting millions of students, this paper answers the question "Can good financial behavior be taught in high school?" It can, though not via personal finance courses, which we find have no effect on financial outcomes. Instead, we find additional training in mathematics leads to greater financial market participation, more investment income, and better credit management, including less bankruptcy and fewer foreclosures.
-
Working Paper
| HBS Working Paper Series
| 2012
The Value of Advice: Evidence from Mobile Phone-Based Agricultural Extension
Shawn A. Cole and A. Nilesh Fernando
Attempts to explain the astonishing differences in agricultural productivity around the world typically focus on farm size, farmer risk aversion, and credit constraints, with an emphasis on how they might serve to limit technology adoption. This paper takes a different tack: can managerial practices explain this variation in productivity? A randomized evaluation of the introduction of a mobile-phone based agricultural consulting service, "Avaaj Otalo (AO)" to cotton farmers in Gujarat, India, reveals the following: demand for agricultural advice is high, with more than half of farmers calling AO in the first seven months. Farmers offered the service turn less often to other farmers and input sellers for agricultural advice. Management practices change as well: we observe an increase in the adoption of more effective pesticides and reduced expenditure on less effective and hazardous pesticides. Treated farmers also sow a significantly larger quantity of cumin, a lucrative but risky crop. Interestingly, use of the service is increasing in the level of farmer education, but education levels do not affect the size of treatment effects. Farmers appear willing to follow advice without understanding why the advice is correct: the average respondent does not demonstrate improved agricultural knowledge, though there is some evidence educated farmers learn from the service.
-
Working Paper
| HBS Working Paper Series
| 2012
Incentivizing Calculated Risk-Taking: Evidence from an Experiment with Commercial Bank Loan Officers
Shawn Cole, Martin Kanz and Leora Klapper
This paper uses a series of experiments with commercial bank loan officers to test the effect of performance incentives on risk assessment and lending decisions. We first show that while high-powered incentives lead to greater screening effort and more profitable lending, their power is muted by both deferred compensation and the limited liability typically enjoyed by credit officers. Second, we present direct evidence that incentive contracts distort judgment and beliefs, even among trained professionals with many years of experience. Loans evaluated under more permissive incentive schemes are rated significantly less risky than the same loans evaluated under pay-for-performance.
Keywords: banking;
management processes;
risk management;
credit products;
experimental economics;
Banks and Banking;
Motivation and Incentives;
Risk Management;
Banking Industry;
India;
-
Working Paper
| HBS Working Paper Series
| 2013
Understanding the Advice of Commissions-Motivated Agents: Evidence from the Indian Life Insurance Market
Santosh Anagol, Shawn Cole and Shayak Sarkar
We conduct a series of field experiments to evaluate the quality of advice provided by life insurance agents in India. Agents overwhelmingly recommend unsuitable, strictly dominated products, which provide high commissions to the agent. Agents cater to the beliefs of uninformed consumers, even when those beliefs are wrong. We test whether regulation or the market can improve advice. A natural experiment requiring disclosure of commissions for a specific product results in agents recommending alternative products with high commissions but no disclosure requirement. Market discipline does generate de-biasing, with agents perceiving greater competition more likely to recommend a suitable product.
Keywords: Customers;
Insurance;
Product;
Service Operations;
Agency Theory;
Sales;
Motivation and Incentives;
Competition;
Value;
Insurance Industry;
India;
-
Working Paper
| HBS Working Paper Series
| 2012
Smart Money: The Effect of Education on Financial Behavior
Shawn Cole, Anna Paulson and Gauri Kartini Shastry
Household financial decisions are important for both households and the greater economy. Yet, our understanding of the process of financial decision-making is limited. Applying standard and two-sample instrumental variables strategies to census and credit bureau data, we provide the first precise, causal estimates of the effects of education on financial behavior. Education has large effects on financial market participation and smaller, but statistically and economically significant effects on financial management. We find that education improves credit scores, and dramatically reduces the probability of declaring bankruptcy or suffering foreclosure during the financial crisis. Examining mechanisms, we show that cognitive ability increases financial participation, and discuss how education may affect decision-making through: attitudes, borrowing behavior, discount rates, risk-aversion, and the influence of coworkers and neighbors.
Keywords: Decision Choices and Conditions;
Household Characteristics;
Education;
Financial Markets;
Market Participation;
Cognition and Thinking;
-
Module Note
|
2013
Financial Services for the World's Poor
Shawn Cole
-
Teaching Note
| HBS Case Collection
|
2013
SKS and the AP Microfinance Crisis (TN)
Shawn Cole
-
Teaching Note
| HBS Case Collection
|
2013
China Life: Micro Insurance for the Poor (TN)
Shawn Cole
-
Teaching Note
| HBS Case Collection
|
2013
(Revised from original 2013 version)
Social Finance, Inc. (TN)
Shawn Cole
Keywords: Investing;
nonprofit;
-
Teaching Note
| HBS Case Collection
|
2013
BANEX and the No Pago Movement (TN) (A) and (B)
Shawn Cole
-
Case
| HBS Case Collection
|
2012
BASIX (Abridged)
Shawn Cole and Peter Tufano
BASIX, an Indian microfinance corporation, must decide whether to continue to sell weather insurance to its clients. A brand-new financial product, weather insurance pays if measured rainfall during the growing season falls below a pre-specified limit. Mr. Sattaiah, managing director of the BASIX's bank, considers a revised insurance policy for the coming season, weighing the costs and potential risks of expanding the product against the potential benefits.
Keywords: Cost vs Benefits;
Microfinance;
Insurance;
Risk Management;
Banking Industry;
India;
Citation: Cole, Shawn, and Peter Tufano. "BASIX (Abridged)." Harvard Business School Case 213-035, September 2012.
-
Case
| HBS Case Collection
|
2013
(Revised from original 2011 version)
Social Finance, Inc.
Shawn Cole, Rawia Abdel Samad, Matt Berner and Raluca Dragusanu
Social Finance attempts to design and launch a complex new financial instrument that will entice private capital to invest in social service provision.
Keywords: Financial Instruments;
Investment;
Social Enterprise;
Citation: Cole, Shawn, Rawia Abdel Samad, Matt Berner, and Raluca Dragusanu. " Social Finance, Inc." Harvard Business School Case 212-055, March 2013. (Revised from original December 2011 version.)
-
Case
| HBS Case Collection
|
2013
(Revised from original 2011 version)
China Life: Micro Insurance for the Poor
Shawn Cole and Lilei Xu
China Life must decide whether to accept the government's "invitation" to develop a microinsurance product for the rural poor. Can it be done profitably?
Keywords: Social Enterprise;
Insurance;
Insurance Industry;
China;
-
Case
| HBS Case Collection
|
2013
(Revised from original 2011 version)
SKS and the AP Microfinance Crisis
Shawn Cole and Yannick Saleman
SKS, India's leading microfinance firm, is challenged when politicians declaim microfinance as exploitation of the poor and severely restrict business practices.
Keywords: Microfinance;
Government Administration;
Policy;
Capital Markets;
Crisis Management;
Poverty;
Financial Services Industry;
India;
Citation: Cole, Shawn, and Yannick Saleman. " SKS and the AP Microfinance Crisis." Harvard Business School Case 212-018, March 2013. (Revised from original October 2011 version.)
-
Supplement
| HBS Case Collection
|
2011
(Revised from original 2009 version)
UBS and Auction Rate Securities (B)
Daniel Baird Bergstresser, Shawn A. Cole and Siddharth Bhaskar Shenai
Supplement to 209119
Keywords: Debt Securities;
Citation: Bergstresser, Daniel Baird, Shawn A. Cole, and Siddharth Bhaskar Shenai. " UBS and Auction Rate Securities (B)." Harvard Business School Supplement 209-131, October 2011. (Revised from original March 2009 version.)
-
Case
| HBS Case Collection
|
2011
(Revised from original 2009 version)
UBS and Auction Rate Securities (A)
Daniel Baird Bergstresser, Shawn A. Cole and Siddharth Bhaskar Shenai
UBS, a global financial services company, must decide whether to continue to support the market for Auction Rate Securities in the face of a growing financial crisis. These instruments, underwritten by UBS, were marketed to clients as highly liquid and safe alternatives to cash. UBS' decision becomes urgent when Citigroup, another leading underwriter of ARS, decides to let their auctions fail, leaving clients with illiquid assets of uncertain value. The case explores theoretical and practical aspects of liquidity risk, and challenges students to evaluate the benefits of honoring implicit commitments to customers against the costs of acquiring billions of dollars in illiquid assets. The (B) and (C) cases consider the implications of UBS decision.
Keywords: Cost vs Benefits;
Financial Crisis;
Asset Pricing;
Financial Liquidity;
Financial Instruments;
Government Legislation;
Risk and Uncertainty;
Financial Services Industry;
Citation: Bergstresser, Daniel Baird, Shawn A. Cole, and Siddharth Bhaskar Shenai. " UBS and Auction Rate Securities (A)." Harvard Business School Case 209-119, September 2011. (Revised from original March 2009 version.)
-
Case
| HBS Case Collection
|
2013
(Revised from original 2011 version)
BANEX and the No Pago Movement (A)
Shawn Cole and Baily Blair Kempner
This case examines Grassroots Capital's decision of whether or not to continue investing in a Bolivian microfinance bank that is suffering financial distress.
Keywords: Risk and Uncertainty;
Government and Politics;
Microfinance;
Insolvency and Bankruptcy;
Investment;
Safety;
Financial Services Industry;
Bolivia;
Citation: Cole, Shawn, and Baily Blair Kempner. " BANEX and the No Pago Movement (A)." Harvard Business School Case 211-092, March 2013. (Revised from original April 2011 version.)
-
Supplement
| HBS Case Collection
|
2013
(Revised from original 2011 version)
BANEX and the No Pago Movement (B)
Shawn Cole and Baily Blair Kempner
This case examines Grassroots Capital's decision of whether or not to continue investing in a Bolivian microfinance bank that is suffering financial distress.
Keywords: Decisions;
Insolvency and Bankruptcy;
Microfinance;
Investment;
Government and Politics;
Crisis Management;
Risk and Uncertainty;
Financial Services Industry;
Bolivia;
Citation: Cole, Shawn, and Baily Blair Kempner. " BANEX and the No Pago Movement (B)." Harvard Business School Supplement 211-102, March 2013. (Revised from original April 2011 version.)
-
Supplement
| HBS Case Collection
|
2010
(Revised from original 2009 version)
UBS and Auction Rate Securities (C)
Daniel Baird Bergstresser, Shawn A. Cole and Siddharth Bhaskar Shenai
Supplement to 209119 and 209131
Keywords: Debt Securities;
Citation: Bergstresser, Daniel Baird, Shawn A. Cole, and Siddharth Bhaskar Shenai. " UBS and Auction Rate Securities (C)." Harvard Business School Supplement 209-135, April 2010. (Revised from original March 2009 version.)
-
Teaching Note
| HBS Case Collection
|
2009
UBS and Auction Rate Securities (TN) (A), (B), and (C)
Shawn A. Cole, Daniel Baird Bergstresser and Siddharth Bhaskar Shenai
Teaching Note for [209119], [209131], and [209135].
Keywords: Financial Services Industry;
-
Teaching Note
| HBS Case Collection
|
2009
SKS Microfinance (TN)
Shawn A. Cole
Teaching Note for [208137].
Keywords: Venture Capital;
Investment;
Financing and Loans;
Valuation;
Social Enterprise;
Equity;
Financial Markets;
Microfinance;
For-Profit Firms;
Financial Services Industry;
India;
-
Teaching Note
| HBS Case Collection
|
2009
First National Bank's Golden Opportunity (TN)
Shawn A. Cole
Teaching Note for [208072].
Keywords: Saving;
Product;
Interest Rates;
Personal Finance;
Cost vs Benefits;
Risk and Uncertainty;
Investment;
Problems and Challenges;
Demand and Consumers;
Product Launch;
Banks and Banking;
Banking Industry;
South Africa;
-
Case
| HBS Case Collection
|
2009
(Revised from original 2008 version)
SKS Microfinance
Shawn A. Cole and Theresa Chen
Vikram Akula, CEO of SKS Microfinance, seeks a venture capital investment to fund his firm. SKS, one of the largest and fastest growing microfinance institutions in India, is a profitable, for-profit institution with a social mission. In what is one of the first commercial financing deals in the world, Akula must decide at what value to sell equity in SKS, and to whom to sell it. The case focuses on valuation, which is difficult because at the time there are no publicly traded comparable companies, and the strategic aspects of raising money.
Keywords: For-Profit Firms;
Venture Capital;
Microfinance;
Corporate Social Responsibility and Impact;
Valuation;
Financial Services Industry;
India;
Citation: Cole, Shawn A., and Theresa Chen. " SKS Microfinance." Harvard Business School Case 208-137, March 2009. (Revised from original May 2008 version.)
-
Case
| HBS Case Collection
|
2008
(Revised from original 2007 version)
First National Bank's Golden Opportunity
Shawn A. Cole, Peter Tufano, Daniel Schneider and Daryl Collins
Executives at First National Bank in South Africa are considering whether to launch a potentially exciting, but rather unorthodox, new savings product. Instead of paying interest, this product gives depositors the chance to win large cash prizes each month. Michael Jordan, CEO of the bank's Consumer Solutions Division, must decide whether to approve the product, weighing the potential benefits against large upfront investment, uncertain market demand, and the complication that the product might face legal challenges.
Keywords: Decision Choices and Conditions;
Banks and Banking;
Investment;
Innovation and Invention;
Product Launch;
Demand and Consumers;
South Africa;
Citation: Cole, Shawn A., Peter Tufano, Daniel Schneider, and Daryl Collins. " First National Bank's Golden Opportunity." Harvard Business School Case 208-072, March 2008. (Revised from original October 2007 version.)
-
Case
| HBS Case Collection
|
2007
(Revised from original 2007 version)
BASIX
Shawn A. Cole and Peter Tufano
BASIX, an Indian microfinance corporation, must decide whether to continue to sell weather insurance to its clients. A brand-new financial product, weather insurance pays if measured rainfall during the growing season falls below a pre-specified limit. Mr. Sattaiah, managing director of the BASIX's bank, considers a revised insurance policy for the coming season, weighing the costs and potential risks of expanding the product against the potential benefits.
Keywords: Cost vs Benefits;
Microfinance;
Insurance;
Risk Management;
Banking Industry;
India;
Citation: Cole, Shawn A., and Peter Tufano. " BASIX." Harvard Business School Case 207-099, October 2007. (Revised from original February 2007 version.)
-
Teaching Note
| HBS Case Collection
|
2007
BASIX (TN)
Shawn A. Cole
Teaching note to (207-099) and (207-108).
Keywords: Financial Institutions;
Insurance Industry;
Citation: Cole, Shawn A. " BASIX (TN)." Harvard Business School Teaching Note 208-017, September 2007.
-
Background Note
| HBS Case Collection
|
2007
BASIX Simulation Model
Peter Tufano and Shawn A. Cole
Explains how to use Crystal Ball to simulate the insurance decision in the BASIX case.
Keywords: Insurance;
Business Model;
Valuation;
Decisions;
Finance;
Insurance Industry;
Citation: Tufano, Peter, and Shawn A. Cole. "BASIX Simulation Model." Harvard Business School Background Note 207-108, February 2007.
Research Summary
-
Research Summary
Research Summaries
by
Shawn A. Cole
For Professor Cole's recent articles and working papers, please visit his personal website>>Click Here
Teaching
-
Teaching Interest
Business at the Base of the Pyramid (MBA)
by
Shawn A. Cole
Target Audience
This is a General Management course aimed at potential managers, entrepreneurs and investment professionals who are interested in addressing the needs of low-income populations, especially in developing countries. The course seeks to provide an understanding of how business approaches can address low income markets that represent the largest components of developing economies, both in numbers of people as well as total income. The course materials explore the commercial viability of such markets, and looks at the impact of such commercial approaches on the social development of the populations involved, as well as the profits of the enterprise.
Overview
In the markets at the top of the socioeconomic pyramid, traditionally served by leading corporations, a global and "flatter" world has relentlessly increased the intensity of competition, and decreased profits. On the other hand, examples of enterprises focusing at the base of the pyramid capable of achieving both scale and commercial rates of return are beginning to be noticed by the business community. Meanwhile, the compatibility of financial viability and positive social change is a question being raised in economic and social development circles that is increasingly part of the political debate in developing nations.
Business at the Base-of- the-Pyramid (B-BOP) addresses these issues by examining enterprises that focus on serving low-income sectors from various perspectives. Roughly two-thirds of the cases in the course have commercial actors as the main protagonist, and the other third has social entrepreneurs as the key protagonists (including NGOs and government agencies as collaborators). The course is composed of an introduction and four main modules: After the introductory class, the opening module will look at business approaches to providing basic services, such as health, water and education. The next module will cover issues in social finance, including micro-finance. After a brief detour to look at technology, and how it can make a contribution, module 3 will look at the role of multi-nationals and how they approach this market, and finally module 4 will look at local businesses and their contribution. The cases used come from Africa, Asia and Latin America (with one case set in the United States.) Related Link: http://www.people.hbs.edu/scole/teaching.html
-
Teaching Interest
Executive Education
by
Shawn A. Cole
-
Teaching Interest
Development Economics (PhD)
by
Shawn A. Cole
This course, intended for second-year PhD students in economics and related fields, is taught by Michael Kremer, Phillippe Aghion, and Shawn Cole.
Part I (Kremer) of the course will cover macro-economic topics including aggregate and non-aggregate growth models, models of technology diffusion and choice, and population growth, as well as cultural factors (e.g. reputation, trust, and social norms) affecting economic development.
Part II (Aghion) will be a selection of topics related to economic growth, among them club convergence, trade, competition, volatility, education, health, and the environment.
Part III (Cole) of the course is intended to bring students to the forefront of research on finance in emerging markets. Topics will include the relationship between financial development and economic growth, consumer finance; small and medium enterprise finance; debt and equity markets; the role of management and corporate governance; the political economy of finance, and corruption. Related Link: http://isites.harvard.edu/icb/icb.do?keyword=k76287
|
|