Microcredit and the Poorest of the Poor: Theory and Evidence from Bolivia
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 linethey 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.
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