Factors Influencing Poverty Outreach Among Microfinance Institutions in Latin America
This report investigates the poverty outreach of 14 microfinance institutions (MFI) across six Latin American countries: Peru, Colombia, Bolivia, Ecuador, Guatemala, and Nicaragua. It uses information that these MFIs have collected in terms of pove...
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
International Finance Corporation, Washington, DC
2017
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| Online Access: | http://documents.worldbank.org/curated/en/703131487137984230/Factors-influencing-poverty-outreach-among-microfinance-institutions-in-Latin-America http://hdl.handle.net/10986/26108 |
| Summary: | This report investigates the poverty
outreach of 14 microfinance institutions (MFI) across six
Latin American countries: Peru, Colombia, Bolivia, Ecuador,
Guatemala, and Nicaragua. It uses information that these
MFIs have collected in terms of poverty likelihood using the
Progress Out of Poverty Index (a.k.a. Simple Poverty
Scorecard) supplemented by in-depth interviews with industry
experts. The following is a summary of the report findings.
Those who reach the highest percentage of poorer clients are
the ones that focus on clients in regions with higher
percentages of poor people. The report also surfaced two
interlinked factors driving poverty outreach across some
Latin American markets: competition and over-indebtedness.
Increased banking saturation is changing the landscape of
microfinance, pushing MFIs who do not explicitly target the
poor to provide loans to poorer individuals. The wealthier
the client of an MFI the larger the average loan size and
number of loans that they receive, which is consistent with
the MFIs’ financial sustainability. Across countries, MFIs
reach the lowest percentages of poorer households in regions
with lower population density and challenging geographies.
The report also found significant correlations between the
number of previous loans and the size of subsequent loans,
but non-significant correlations between the percentage of
poorer MFI clients in a region and the loan size. The report
also triangulates information gleaned from MFI interviews to
shed light on their behavior, such as the commercial
strategies of these MFIs. Micro-level data was also used to
understand the MFIs’ client profiles in terms of loan size
and the frequency with which they receive loans. |
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