In Israel, charitable organizations called gemachs were established by Orthodox Jews based on the Judaic principle of gemilat chesed (loving kindness). These organizations offer services to the needy. This study focuses on “financial” gemachs that offer interest-free loans to deserving people who do not qualify for a commercial bank loan. These organizations play a small but significant role in the Israeli social financial system.
Gemachs are not formal legal entities and are not tracked by the Israeli Ministry of Taxation as charitable organizations. Therefore, each gemach operates according to its own standards and procedures. An extensive literature search found no prior published research into the operation of financial (or other) gemachs. It is therefore of interest to study how financial gemachs operate, who they serve, and how they are viewed in Israeli society.
The first focus of this dissertation is to analyze data on past loans that were obtained from a sample of 10 Israeli financial gemachs. This includes a study of the demographics of the borrowers, the distributions of the borrowed amounts and payback periods, and other aspects of the loans. An unsuccessful attempt is made to determine through statistical analysis whether loans that are likely to default can be identified through characteristics of the borrower at the time of the loan application. The percentage monetary loss due to defaults in loans in the sample is found to be less than the percentage monetary loss due to defaults in personal loans in Israeli commercial banks.
The second focus of the dissertation is to survey the general Israeli population for demographic information and for information about peoples' knowledge about and attitudes toward financial gemachs. This survey separately samples (a) the general Israeli population, (b) the religious sector, and (c) the ultra-Orthodox sector to facilitate comparisons between the three groups.
This work will be of interest to social researchers studying gemachs, economists monitoring Israeli secondary financial markets, associates of financial gemachs (managers, benefactors, and borrowers), and general readers who are curious about gemachs. The appendices contain (a) a glossary of Hebrew and financial terms, (b) a detailed discussion of the Jewish commandment of lending money, (c) some humorous, distressing, and heartening case studies of financial gemach loans, and (d) other relevant ancillary information.
|School:||Union Institute and University|
|School Location:||United States -- Ohio|
|Source:||DAI-A 69/10, Dissertation Abstracts International|
|Subjects:||Economics, Finance, Banking|
|Keywords:||Free loan, Gemachs, Hebrew loan, Hebrew loan societies, Interest-free loan, Israel, Loan associations, Microcredit|
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