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Do Multiple Financial Services Enhance the Poverty Outreach of Microfinance Institutions?

Listed author(s):
  • Koen Rossel-Cambier

Documented deficiencies in traditional social transfer mechanisms have led to the emergence of alternative methods for reducing poverty. In many countries, microfinance institutions (MFIs) have become popular instruments for redistributive pro-poor policies. While microcredit programmes have undoubtedly improved the lives of millions of poor households, they are also criticised for not being inclusive enough to reach out to the poor and their specific needs. This paper explores if the current trend towards product diversification can be an appropriate policy response for enhanced poverty outreach, in particular when combining micro-credit with savings and insurance. By reviewing cross-sectional evidence of 250 microfinance schemes in Latin America and the Caribbean,one canfind positive effects of combined microfinance (CMF) on the breadth of outreach. Still, the contribution of CMF on the depth of poverty outreach is less evident, both viewed from an income-related and gender-sensitive lens. The findings suggest that the presence of savings is accompanied with a relatively lower participation of poor and female clients. Practitioners and policy makers –when designing CMF- must ensure that pragmatic mechanisms are in place to ensure that the neediest are reached.

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Paper provided by ULB -- Universite Libre de Bruxelles in its series Working Papers CEB with number 10-058.

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Length: 40 p.
Date of creation: Dec 2010
Publication status: Published by:
Handle: RePEc:sol:wpaper:2013/70368
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