Impact of Microfinance on Rural Households in the Philippines: A Case Study from the Special Evaluation Study on the Effects of Microfinance Operations on Poor Rural Households and the Status of Women

This paper presents the impact evaluation of Rural Microenterprise Finance Project (RMFP) in the Philippines. RMFP aimed to support government efforts to strengthen rural financial institutions by assisting organizations that employed the Grameen Bank approach (GBA) in providing credit to the poor.The study, using a quasi-experimental design which included a survey of existing and former clients, found that:

• Majority of clients deemed qualified for the program are not poor as per the official definition suggesting imperfect application of targeting approaches or lack of motivation for the implementers to seek poor clients;
• Cost and availability of program loans among the poorer borrowers is insufficient to encourage them to select productive activities that help them repay the loan and make profits;
• Program loans enabled participants to reduce dependence on higher priced non-GBA loans;
• Program had a significant impact on household assets and human capital investment such as health and education.

Finally, the study emphasizes the need to review targeting procedures, regularly assess the economic status of clients and assist the poor in selection of appropriate projects.