II.4.3- Clients targeting
There are two primary issues in client targeting: first,
gender targeting (lending to women versus lending to men) and second, poverty
targeting (lending to the very poor and poor versus lending to the marginally
poor and non-poor).
? Gender targeting
Many MFIs target primarily, or exclusively, women. This
practice is based on the common belief that women invest the loans in
productive activities or in improving family welfare more often than men, who
are assumed to consume rather than invest loan funds. Pitt and Khandker (1998)
use empirical data from Bangladesh over the period of 1991-1992 to test the
hypothesis that women use borrowed funds more efficiently than men. They use
household expenditures, nonland assets held by women, male and female labor
supply, and boys' and girls' schooling as measurement outcomes. The authors
find that although the availability of microfinance positively impacts all six
areas in the aggregate, all areas are significantly affected when women borrow,
but only one of the six is significantly affected when men borrow. When women
borrow, but only one of the six is significantly affected when men borrow.
21
Analysis of microfinances' performance and
development of informal institutions in Cameroon
By Djamaman Brice Gaétan
Examining a related question, Kevane and Wydick (2001) use a
sample of 342 MFI participants in Guatemala to analyze the assertion that male
borrowers produce more economic growth than women and those women facilitate
more poverty alleviation. They find no significant differences between men and
women in generating business sales and a small advantage of employment
generation by men relative to women. They attribute the difference between men
and women to the role of women in childbearing.
Underlying the emphasis on lending to women is the widespread
belief that access to financial services empowers women, both financially and
socially7.Testing this belief, Amin et al. (1998) use qualitative
and quantitative evidence in Bangladesh to show that membership in microfinance
programs among other factors is positively related to women's empowerment. In
contrast, Ehlers and Main (1998) analyze microenterprise development programs
for poor US women and argue that the microfinance assistance is more
detrimental and problematic than advocates believe.
? Very-Poor versus Marginally-Poor
Targeting
As mentioned earlier, one of the most significant and
controversial debates in microfinance is whether and to what extent there
exists a trade-off between financial self-sufficiency and depth of outreach.
Integral to this debate is whether to achieve self-sufficiency MFIs must target
marginally-poor or non-poor clientele so as to capture economies of scale and
cover costs8.
The last three articles in this section address who
participates, and who does not participate, in microfinance programs and
whether micro entrepreneurs are subject to credit rationing. Evans (1999)
conducts an empirical examination of microfinance clients in Bangladesh. He
reports that only 25% of eligible households participate and that rates of
Participation is higher among the poorer. Multivariate
analysis indicates that lack of female education, small household size, and
landlessness are risk factors for nonparticipation. Baydas et al. (1994a,
1994b) analyze credit rationing in Ecuador by MFIs. In one study (1994a), they
construct and estimate a supply and demand model to analyze factors MFIs use to
ration credit and find that micro entrepreneurs with less profitable
enterprises and less education have
7 Women's empowerment is a critical
issue in the developing world context in which women routinely live at the
margins of society being denied basic human rights, individual dignity,
economic and educational opportunities, and social/political voice by
male-dominated social norms both within society at large and within their own
households.
8 The issue of targeting
has taken on more importance, as the U.S. Congress recently amended the
Microenterprise for Self-Reliance Act to ensure that at least fifty percent of
all the microenterprise resources it grants shall be targeted to the very poor.
The very poor are defined either as those living in the bottom fifty percent
below the «official» national poverty line or those living on the
equivalent of less than $1 per day adjusted for purchasing power
parities.
Analysis of microfinances' performance and
development of informal institutions in Cameroon
By Djamaman Brice Gaétan
smaller. Demand for microcredit. In another study (1994b),
they test for evidence of discrimination against women micro entrepreneurs by
formal sector lenders in Ecuador. They find that men and women have equally
small probabilities of being quantity rationed for loans and conclude that
gender discrimination is not widely practiced in Ecuador.
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