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

Koen Rossel-Cambier

No 10-058, Working Papers CEB from ULB -- Universite Libre de Bruxelles

Abstract: 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.

Keywords: microfinance; combined microfinance; microinsurance; microcredit; microsavings; poverty; social inclusion (search for similar items in EconPapers)
JEL-codes: C12 G21 G22 L31 O54 (search for similar items in EconPapers)
Pages: 40 p.
Date: 2010-12
New Economics Papers: this item is included in nep-dev, nep-ias and nep-mfd
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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