MICROCAPITAL BRIEF: FINCA Case Studies Explore Relationship Between Food Security and Microfinance, Analyze Client Data Using World Bank’s Human Opportunity Index

FINCA International, a US-based network of microfinance institutions (MFIs) in 21 countries, recently published two case studies: “Exploring the Linkages between Food Security and Microfinance: A Study by FINCA in Zambia and Guatemala” and “FINCA Client Data Viewed through World Bank’s Human Opportunity Index.” The case studies are part of an effort by FINCA to use hard data to identify and promote best practices in the industry.

The first paper investigates the relationship between food security and access to microfinance, based on observations from FINCA affiliates in Zambia and Guatemala. Food security is defined by three primary components – availability, access and utilization – which are measured by whether individuals use various coping mechanisms and strategies. Through qualitative and quantitative approaches, the authors attempts to address a number of concerns, including whether microfinance uptake has a positive impact on food security, different characteristics of rural and urban populations, and the possible benefits of lending specifically for agricultural pursuits. The study finds that access to financial services and “dietary diversity” are correlated and that there is a significant causal relationship between rising income levels and increased food security [1].

In the second paper, FINCA researchers analyze data from clients and their children that has been collected in Ecuador, El Salvador, Honduras, Mexico and Nicaragua. Through regression analysis, the case study explores the possibility of correlations among school attendance, access to quality housing, improved sanitation, food security and a past relationship with FINCA MFIs. The authors conclude that food security has a high correlation with school attendance, while past experience with FINCA was highly related to the use of proper sanitation facilities. FINCA’s analysis was conducted using the framework of the Human Opportunity Index, a tool developed by the US-based World Bank, that estimates “a child’s probability of accessing the services necessary to succeed in life” [2].

By Rohan Trivedi, Research Associate

About FINCA International:
Founded in 1984 by Dr John Hatch, a pioneer of the village banking model, the Foundation for International Community Assistance (FINCA) International is a microfinance network based in Washington, DC, that serves approximately 700,000 people through its subsidiaries in 21 countries. As of 2009, FINCA reported total assets of USD 467 million, with an operating profit of USD 742,000.

About The World Bank Group:
The World Bank Group consists of five institutions, all of which are owned by its member countries. The Group’s mission is to improve living standards for people in the developing world. The World Bank Group encompasses the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); the International Centre for Settlement of Investment Disputes (ICSID) and the World Bank, which consists of the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA).

Sources and Additional Resources:

[1] FINCA Field Brief: “Exploring the Linkages between Food Security and Microfinance: A Study by FINCA in Zambia and Guatemala”, http://www.finca.org/atf/cf/{FD809671-5979-4D43-BFB8-3301E4FC97EB}/FIELD_Brief%20No%2011_FINCA%20Food%20Security%20and%20Microfinance%20FINAL.pdf

[2] FINCA Brief: “FINCA Client Data Viewed through World Bank’s Human Opportunity Index”, http://www.finca.org/atf/cf/{FD809671-5979-4D43-BFB8-3301E4FC97EB}/FINCA%20Human%20Opportunity%20Index%20_HOI_%20Synopsis%20June%202011.pdf

MicroCapital.org story, June 24, 2011: “MICROCAPITAL BRIEF: FINCA International Announces Launch of FINCA Microfinance Holdings With Investments of $74m from IFC, KfW, FMO, responsAbility, Triple Jump”, https://www.microcapital.org/microcapital-brief-finca-international-announces-launch-of-finca-microfinance-holdings-with-investments-of-74m-from-ifc-kfw-fmo-responsability-triple-jump/

MicroCapital.org story, March 6, 2008: “WHO’S WHO IN MICROFINANCE: John Hatch, Foundation for International Community Assistance (FINCA)”, https://www.microcapital.org/whos-who-in-microfinance-john-hatch-foundation-for-international-community-assistance-finca/

MicroCapital Universe Profile: FINCA International, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=FINCA+International

MicroCapital Universe Profile: The World Bank Group, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=The+World+Bank+Group

Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/

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