Identifying Complementary Programs to Maximize the Impact of Microcredit

This document argues that to successfully combat poverty, extension of access to credit must be coupled with complementary programs that maximize the positive impact of the microcredit programs. The document:

• Presents data from interviews that FINCA interns conducted with 3,500 microcredit clients in 10 program locations.
• Uses this data to assess impact and explore the vulnerabilities that prevent some clients from rising out of poverty.
• Suggests complementary programs that may mitigate the vulnerabilities and maximize the impact of the microcredit program.
• Utilizes Discriminant analysis to uncover the vulnerabilities that may impede clients' success, these include housing, literacy, and other vulnerabilities.

The study finds that the variables that discriminate between those living below and above the poverty line vary somewhat between specific regions and between the 10 program locations. However, housing consistently emerges as a variable that makes a difference to a client's poverty level. The document concludes that:

• Pinpointing vulnerabilities allows microcredit practitioners to identify the complementary programs or interventions that will maximize the impact of microcredit.
• Practitioners in FINCA program locations may want to look more closely at conditions surrounding housing, literacy, and other vulnerabilities, and consider complementary programs that address these conditions.
• Ultimately, these targeted interventions can assist greater numbers of clients to rise out of poverty.