Institutional change means changing the rules and organisations an economy runs on. The first is access to banking.
Access to banking
Microfinance
Small loans to people with no collateral. Bangladesh's Grameen Bank lends mostly to women.
Mobile banking
Save and send money by phone. Kenya's M-Pesa has done this since 2007.
Savings accounts
A safe place to save, so savings can be lent to others.
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Other institutional changes give people rights and trust.
Rights, women and honest government
Property and land rights
A legal title lets land back a loan and makes improving it worthwhile.
Women's empowerment
Schooling, credit and land for women raise output and children's health.
Less corruption
Fewer bribes cut firms' costs; public money reaches schools and clinics.
The points to remember
- Each change raises investment or human capital: say which.
- Land titles: land can be collateral for a loan.
See how examiners mark answers
Answer exam-style questions with model answers. Learn exactly what earns marks and what doesn't.
A social enterprise is a business whose main aim is social or environmental: it sells, then reinvests its profit in that aim.
What a social enterprise is
A charity
Lives on donations; gives help away.
A social enterprise
Sells goods or services, then reinvests profit in a social aim.
A profit-seeking firm
Sells to earn profit for its owners.
The points to remember
- Strength: it pays its own way, so it lasts without donors.
- Limit: it is small, and may struggle to earn enough.
Paper 1 asked this in May 2024, as part (a) for 10 marks.
Explain the importance of improved access to banking services, such as microfinance and mobile banking, in promoting economic development.
Model answer plan
See the answer broken into clear points, with guidance on how each point earns marks.
How the 10 marks are given
| Marks | What your answer needs |
|---|---|
| 9–10 | Theory fully explained, terms used correctly all the way through, the diagram included and fully explained |
| 7–8 | Theory explained, terms mostly right, the diagram included and explained |
| 5–6 | Theory partly explained, some terms, the diagram included |
| 1–4 | Theory only described or stated; few relevant terms |