Do Multiple Financial Services Enhance the Poverty Outreach of Microfinance Institutions?

This paper examines whether combined microfinance (CMF) could enhance poverty outreach.

The paper derives hypotheses from review of literature and websites, and tests them using cross-sectional analysis of audited observations from 250 MFIs in Latin America and the Caribbean. It focuses on CMF which combines microcredit with savings and insurance. Findings include:

• Combining of products has positive impact on breadth of outreach of MFIs;
• Supply of savings does not enhance income-related depth of outreach;
• Availability of savings adversely affects women-specific depth of outreach.

The paper suggests that while CMF can enhance self-sustainability, it could have relative adverse effects from the poverty point of view. Future research could explore how elimination of access barriers to savings can contribute to financial development of local businesses and households. The study underscores the need to monitor depth of outreach indicators while designing and implementing CMF.