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Can Microfinance Reach the Poorest: Evidence from a Community-Managed Microfinance Intervention

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  • Lønborg, Jonas Helth
  • Rasmussen, Ole Dahl

Abstract

Reaching the poorest is an important objective in many development interventions, and microfinance is no exception. We review performance indicators for effectiveness of targeting described in the literature and suggest a new metric in order to account for extent and severity of poverty as well as the income distribution among the poor. When applying this to a panel dataset from a community-managed microfinance intervention in Northern Malawi, we find regressive targeting: Participants are less poor than the general population in the area. In addition, we provide suggestions as to when and why the poor exit the project.

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  • Lønborg, Jonas Helth & Rasmussen, Ole Dahl, 2014. "Can Microfinance Reach the Poorest: Evidence from a Community-Managed Microfinance Intervention," World Development, Elsevier, vol. 64(C), pages 460-472.
    • Handle: RePEc:eee:wdevel:v:64:y:2014:i:c:p:460-472
    DOI: 10.1016/j.worlddev.2014.06.021
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    Cited by:

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    9. Kazushi Takahashi & Abu Shonchoy & Seiro Ito & Takashi Kurosaki, 2017. "How Does Contract Design Affect the Uptake of Microcredit among the Ultra-poor? Experimental Evidence from the River Islands of Northern Bangladesh," Journal of Development Studies, Taylor & Francis Journals, vol. 53(4), pages 530-547, April.
    10. Araya Teka & Sung-Kyu Lee, 2020. "Do Agricultural Package Programs Improve the Welfare of Rural People? Evidence from Smallholder Farmers in Ethiopia," Agriculture, MDPI, vol. 10(5), pages 1-20, May.
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    13. Medina, Gabriel & Almeida, Camila & Novaes, Evandro & Godar, Javier & Pokorny, Benno, 2015. "Development Conditions for Family Farming: Lessons From Brazil," World Development, Elsevier, vol. 74(C), pages 386-396.
    14. Icíar García-Pérez & María Ángeles Fernández-Izquierdo & María Jesús Muñoz-Torres, 2020. "Microfinance Institutions Fostering Sustainable Development by Region," Sustainability, MDPI, vol. 12(7), pages 1-23, March.
    15. Donou-Adonsou, Ficawoyi & Sylwester, Kevin, 2017. "Growth effect of banks and microfinance: Evidence from developing countries," The Quarterly Review of Economics and Finance, Elsevier, vol. 64(C), pages 44-56.
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    17. Hermes, Cornelis & Hudon, M., 2018. "Determinants of the Performance of Microfinance Institutions: A Systematic Review," Research Report 2018008, University of Groningen, Research Institute SOM (Systems, Organisations and Management).

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