Using data from approximately 18,000 beneficiaries of 72 microfinance institutions (MFIs) in 41 countries, the authors of this report rank the participating MFIs based on social impact. The researchers collected the data via surveys administered to 250 randomly selected clients for each MFI. The surveys covered 18 indicators, such as first-time access to finance, increases in business income, increases in numbers of employees, awareness of loan conditions before borrowing, ability to manage financial shocks, sacrifices made to repay loans and various household indicators.
The authors conclusions include that: (1) microfinance generally does reach those without access to financial services; (2) group lending models attract more first-time clients; (3) increases in microbusiness income positively correlate with household outcomes; (4) one in three clients – roughly in the same ratio whether male or female – indicated that their quality of life was “very much improved” by a microloan.
Of all the survey respondents, 47 percent live in Sub-Saharan Africa, 35 percent in Asia, 17 percent in Latin America and the Caribbean, and 2 percent in Middle East and North Africa. The average age was 42, and two thirds of the participants were women.
Regarding regional differences in the results: (1) all 10 of the highest-rated MFIs are based in Sub-Saharan Africa; (2) standards of living were higher in Latin America and the Caribbean than in other surveyed regions to begin with, but percentage household income increases there were nearly equal to those in other regions; (3) Southeast Asian respondents were least likely to report loans positively impacted their businesses; and (4) among participants from India, 60 percent indicated that they never had to cut their food consumption to repay a microloan compared to 73 percent in the rest of the sample.
This is a summary of a paper by Sasha Dichter, Devin Olmarck, Ellie Rodgers and Akanksha Singh; published by 60 Decibels; June 2022; 51 pages; available at https://app.60decibels.com/mfi-index.
By Saulius Simonas Ramanauskas, Research Associate
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