We construct a theoretical framework that puts the social worth of a microfinance organization (MFO) in terms of the depth, worth to users, cost to users, breadth, length, and scope of its output. We then analyze evidence of depth of outreach for five MFOs in Bolivia. Most of the poor households reached by the MFOs were near the poverty line-they were the richest of the poor. Group lenders had more depth of outreach than individual lenders. The urban poorest were more likely to be borrowers, but rural borrowers were more likely to be among the poorest.
How poor are participants in pro-poor programs in Pakistan? This study uses the 2005/6 Social and Living Standards Measurement Survey to construct an easy-to-use scorecard that estimates the likelihood that a Pakistani household has expenditure below a given poverty line. The scorecard uses 10 simple indicators that field workers can quickly collect and verify. Poverty scores can be computed on paper in the field in about 5 to 10 minutes. The scorecard’s accuracy and precision are reported for a range of poverty lines. The poverty scorecard is a practical way for pro-poor programs in Pakistan to monitor poverty rates, track changes in poverty rates over time, and target services.
We are grateful to the Corporation for Enterprise Development for implementing ADD and the 14 ADD program sites for allowing us to carry out the research.
Reports of the success of the Grameen Bank of Bangladesh have led to rapid growth in funding for microfinance. But has the Grameen Bank been cost‐effective? This article compares output with subsidy for the bank in a present‐value framework. For the timeframe 1983–97, subsidy per person‐year of membership in Grameen was about $20, and subsidy per dollar‐year borrowed was about $0.22. Although the article does not measure consumer surplus for Grameen users, the evidence in the literature suggests that surplus probably exceeds subsidy. The Grameen Bank — if not necessarily other microlenders — was probably a worthwhile social investment.
Microfinance-both credit and savings-has potential to improve the well-being of poor women in developing countries. This paper explores practical ways to achieve that potential. Based on lessons from informal saving mechanisms that women already use, the paper proposes two savings services designed to address the development issues that confront women. The proposals call for safe-deposit boxes and for matched savings accounts for health care or education.
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