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Estimating the depth of microfinance programme outreach: empirical findings from rural Pakistan

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  • Asad K. Ghalib
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    Abstract

    Microfinance has emerged on the global scale as a key strategy to reduce poverty and promote development. Most of the relevant literature, however, tends to concentrate on breadth as opposed to depth of programme outreach. This paper is based on a primary household survey of 1,132 respondents in the Punjab Province of Pakistan to assess which category of the poor is being served by microfinance institutions. Are they the very poor, middle poor or less poor households? In order to make comparisons, borrower (treatment) and non-borrower (control) households are interviewed and, by employing Principal Component Analysis (PCA), each household is allocated a specific poverty score in relation to all other households in the sample. Once the poverty index is obtained, sampled households are ranked in order of varying poverty levels. Comparisons are later made between borrower and non-borrower households to estimate programme outreach. The paper concludes with findings that the depth of poverty outreach is significantly lower than what has been hitherto proclaimed by service providers and reflects on policy implications to enhance depth (as opposed to breadth) of programme outreach to address the needs of the poorest of the poor, in order to contribute meaningfully and effectively towards combating poverty.

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    File URL: http://www.bwpi.manchester.ac.uk/medialibrary/publications/working_papers/bwpi-wp-15411.pdf
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    Bibliographic Info

    Paper provided by BWPI, The University of Manchester in its series Brooks World Poverty Institute Working Paper Series with number 15411.

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    Date of creation: 2011
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    Handle: RePEc:bwp:bwppap:15411

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    1. Gupta, Manash Ranjan & Chaudhuri, Sarbajit, 1997. "Formal Credit, Corruption and the Informal Credit Market in Agriculture: A Theoretical Analysis," Economica, London School of Economics and Political Science, vol. 64(254), pages 331-43, May.
    2. Ghazala Mansuri, 2004. "Community-Based and -Driven Development: A Critical Review," World Bank Research Observer, World Bank Group, vol. 19(1), pages 1-39.
    3. James Copestake, 2002. "Inequality and the polarizing impact of microcredit: evidence from Zambia's copperbelt," Journal of International Development, John Wiley & Sons, Ltd., vol. 14(6), pages 743-755.
    4. Niels Hermes & Robert Lensink, 2007. "Impact of microfinance: a critical survey," ULB Institutional Repository 2013/14196, ULB -- Universite Libre de Bruxelles.
    5. Elio H Londero, 2004. "Poverty Targeting Classifications and Distributional Effects," Public Economics 0407012, EconWPA.
    6. Imran Matin & David Hulme & Stuart Rutherford, 2002. "Finance for the poor: from microcredit to microfinancial services," Journal of International Development, John Wiley & Sons, Ltd., vol. 14(2), pages 273-294.
    7. repec:idb:brikps:51778 is not listed on IDEAS
    8. Carla Henry & Manohar Sharma & Cecile Lapenu & Manfred Zeller, 2003. "Microfinance Poverty Assessment Tool," World Bank Publications, The World Bank, number 15065, October.
    9. Beatriz Armendáriz de Aghion & Jonathan Morduch, 2000. "Microfinance Beyond Group Lending," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 8(2), pages 401-420, July.
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