The Varying Economic Impact of Village Banking

This study examines the relationship between economic impact of village banking and the income/expenditure levels of different client bases, with the hypothesis that impact will be greater for poorer client bases. The study carries out T-tests and regression analyses on data compiled from client interviews in nine FINCA affiliates. It examines whether FINCA membership has a statistically significant impact on members' expenditure. It determines if there is a correlation between the impact of membership and the overall well-being of clients, and compares results across the nine affiliates. The study divides clients into three groups based on median expenditure levels, namely, the poorest of the poor, the middle income group and the richest group. Study results indicate that:

• Results from individual affiliates were inconclusive;
• Results from the affiliate groups provided convincing evidence that impact is greatest in poorer countries.

The paper states that income/expenditure levels influence impact of village banking, but the exact level cannot be measured unless the study is controlled for country factors. It recommends:

• Targeting expansion activity to the world's poorest countries;
• Carrying out further research to isolate the role of clients well-being in determining impact.