Alleviating Global Poverty through Microfinance: Factors and Measures of Financial, Economic, and Social Performance (Draft)

This paper aims to answer the following questions:

• What are the primary determinants of success for microfinance institutions?
• What are the appropriate measures of success?
• Is the primary goal of microfinance institutions to provide access to capital to the poor or to provide additional income?
• Is it necessary that borrowers are also able to improve living conditions that include better housing, nutrition, education, etc.?

In this regard, the paper examines:

• The political and business environment;
• The microfinance institutional leadership;
• The strategy, structure and systems that manage the organization;,
• Borrower characteristics.

The study:

• Specifies the antecedents and consequences of investments in microfinance;
• Examines the nature and amount of existing contributions,
• Considers how to enhance the contribution of microfinance to the alleviation of global poverty;
• Reviews literature;
• Examines prior impact studies and data;
• Interviews senior officers at Opportunity International;
• Analyzes data and field interviews of microfinance activities in Ghana.

The study develops a microfinance contribution model that:

• Articulates the antecedents and consequences of investments in microfinance to identify both the key success factors and the key performance indicators of microfinance success;
• Includes a specification of the performance drivers and a set of measures for the inputs and processes that lead to success;
• Develops a set of measures for both outputs and outcomes.