zeller peru bangladesh
TRANSCRIPT
1
Is There a Difference in Poverty Outreach by Type of
Microfinance Institution? The Case of Peru and Bangladesh
Manfred Zeller Institute of Agricultural Economics and Social Sciences in the
Tropics and Subtropics University of Hohenheim, Stuttgart, Germany
Julia JohannsenInstitute of Rural Development
Georg-August-University Göttingen, Germany
Global Conference on ‘Access to Finance: Building Inclusive Financial Systems’
of The World Bank and the Brookings Institution in Washington, D.C.,
May 30 and 31, 2006
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Outline of presentation
• Changing paradigms and policy objectives in development finance
• Types of financial institutions• Sampling design and poverty lines
• Poverty outreach of MFIs– Bangladesh– Peru (national and MFI sample)
• Conclusions
3
The triangle of finance: Synergies and trade-offs
Outreach (Breadth and Depth)
Welfare impact (Direct/Indirect)
Financial sustainability
Source: Zeller, M., and Meyer, R.L. 2002. The triangle of microfinance: Financial sustainability, outreach, and impact. Book published by IPPRI/John Hopkins Univ, Dec. 2002.
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Types of financial institutions
• Semi-formal Institutions (NGO-MFIs)• Member-based institutions:
(1) Credit unions (2) Village banks (supported by NGOs)
• Micro-banks, lending technologies: Individual and solidarity group lending,linkage model (with pre-existing self-help groups)
• Other: (1) Public banks (sectoral, agricultural, rural) (2) private commercial banks with MF
windows
5
Sampling design
• Nationally representative self-weighing sample of 800 households (IRIS Center)
• Multi-stage cluster sampling• Probability-proportionate-to-size (PPS) • Bangladesh: 10 counties (Thanas) in 5 divisions (x 80 hhs)• Peru: 8 of 24 departments (x 100 hhs), controlling for 7
geographic areas (rural/urban macro-regions):- Lima Metropolitan, Urban/Rural Coast, Urban/Rural
Highland, Urban/Rural Lowland
• Peru: 6 purposefully selected MFIs (1175 client hhs)
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Poverty lines in Peru
4.16
4.16
4.16
4.16
4.16
4.16
4.16
2.08
2.08
2.08
2.08
2.08
2.08
2.08
8.45
6.99
4.75
6.01
3.93
5.81
4.04
5.98
4.68
3.04
4.04
2.38
3.83
2.60
Lima Metrop.
Urban Coast
Rural Coast
Urban Highland
Rural Highland
Urban Highland
Rural Lowland
Internat. 2$ Poverty
Line
(Soles/pers/day)
Internat. $1 Poverty
Line
(Soles/pers/day)
National Poverty
Line
(Soles/pers/day)
Median Poverty
Line
(Soles/pers/day)
Expenditures July 2004
Region
Source: adapted from Zeller, Johannsen and Alcaraz (2005)
Regionally disaggregated national and median poverty line and international $2 and $1-poverty line
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Poverty lines in Bangladesh
23.10
23.10
23.10
23.10
23.10
23.10
23.10
23.10
22.96
17.05
21.84
20.94
24.85
19.47
20.16
17.57
24.80
22.24
27.77
27.06
30.22
23.18
25.97
21.90
Rural Dhaka
Rural Faridpur, Tangali, Jamalpur
Rural Sylhet, Comilla
Rural Noakhali, Chittagong
Urban Khulna
Rural Barishal, Pathuakali
Rural Rajshahi, Pabna
Rural Bogra, Rangpur, Dinajpur
Internat. $1 Poverty
Line
(Taka/pers/day)
Median Poverty
Line
(Taka/pers/day)
National Poverty
Line
(Taka/pers/day)
Expenditures July 2004
Region
Source: adapted from Zeller, Johannsen and Alcaraz (2005)
Regionally disaggregated national and median poverty line and $1-poverty line
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Gender and residence of clients in Bangladesh (N=2209 adults)
(100%)53.0% 47.0%21.6% 78.4%Total
49.6% 50.4%19.8% 80.2%Non-clients
2.7%53.8% 46.2%69.2% 30.8%Other (private bank, coop, etc.)
4.7%54.2% 45.8%8.3% 91.7%Other governmental institution providing microfinance
28.7%7.6% 92.4%16.0% 84.0%Public bank
63.9%90.5% 9.5%32.6% 67.4%NGOs providing microfinance
Share (%) of total
clients
Sex of client
FEMALE MALE
Does client live in rural area?
NO YESMain type of financial institution
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Poverty outreach in Bangladesh
27.835.116.637.2MeanTotal (N=2209)
28.135.716.537.1MeanNon-clients (N=1700)
30.830.830.839.2MeanOther (private bank, coop, etc.)
8.38.38.352.7MeanOther government institutions providing microfinance(N=24)
16.725.07.642.2MeanPublic bank (N=144)
32.338.721.034.6MeanNGOs providing microfinance (N=328)
Below the internat.
Poverty line ($PPP 1.08
at 1993 prices)
Below the national
poverty line (adj. by
regions)(%)
Below the median
poverty line (adj. by
regions)(%)
Daily expenditures
per capita (Taka)
Main type of financial institution
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Poverty by length of membership
27.835.116.637.2MeanTotal (N=2209)
28.135.616.537.1MeanNon-clients (N=1700)
17.020.18.842.8MeanLonger than five years
(N=159)
29.038.520.037.4MeanTwo to Five years
(N=200)
34.040.021.332.7MeanLess than two years
(N=150)
Below the internat.
Poverty line ($PPP 1.08
at 1993 prices)
Below the national
poverty line (adj. by regions)
(%)
Below the median
poverty line (adj. by
regions) (%)
Daily expenditures
per capita (Taka)
Length of client relationship (in approx. terciles)
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Gender and residence of clients in Peru (N=2325 adults)
(100.0%)48.6% 51.4%71.0% 29.0%Total
47.0% 53.0%70.1% 29.9%Non-clients
16.6%72.0% 28.0%72.0% 28.0%Other (NGO, rural savings banks, coop, etc.)
23.2%77.1% 22.9%74.3% 25.7%Municipal Savings and Loan Banks (CMACs)
37.7%75.4% 25.7%93.0% 7.0%Private banks (including micro-banks such as MiBanco)
22.5%58.8% 41.2%88.2% 11.8%Public bank (Banco de la Nacion)
Share (%) of total
clients
Sex of client
FEMALE MALE
Does client live in rural
area?
NO YES
Main type of financial institution
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Poverty outreach in Peru
9.1
9.6
8.0
0.0
0.0
2.9
Below the internat. Poverty
line($PPP 1.08 at 1993
prices)
32.051.728.07.4MeanTotal (N=2325)
33.553.629.27.2MeanNon-clients (N=2174)
20.028.08.010.3MeanOther (NGO, rural savings bank, coop, etc.) (N=25)
2.925.70.09.4MeanMunicipal Savings and Loan Banks (N=35)
3.521.18.811.8MeanPrivate banks (including MiBanco) (N=57)
23.526.523.510.2MeanPublic bank (Banco de la Nacion) (N=34)
Below the internat. Poverty
line($PPP 2.16 at 1993
prices)
Below the national poverty line(adj.
by regions)
(%)
Below the median poverty line(adj.
by regions)
(%)
Daily expenditures
per capita (Soles)
Main type of financial institution
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Poverty rate, by participation in formal savings
32.510.050.426.97.6MeanTotal (N=800)
11.42.921.45.712.8MeanYES (N=70)
34.510.753.228.97.0MeanNO (N=730)
Below the internat. Poverty
line($PPP 2.16 at 1993
prices)
Below the internat. Poverty
line($PPP 1.08 at 1993
prices)
Below the national poverty line(adj.
by regions)
(%)
Below the median poverty line(adj.
by regions)
(%)
Daily expenditures
per capita (Soles)
Household has a formal savings account
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6 selected MFIs
• EDYFICAR, registered NGO (non-bank financial institution, only credit)
• CRAC Cruz de Chalpon (rural savings and loan bank)
• CMAC Chincha (municipal savings and loan bank)• Coop San Isidro Huaral (cooperative)• Coop San Pedro Andahuaylas (cooperative)• CARITAS (NGO)
• none with explicit women targeting• only San Pedro and Caritas with rural/poverty
targeting objective
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Poverty outreach of 6 MFIs
44.543.516.06.4Coop San Pedro Andahuaylas (N=200)
1.515.54.012.2Coop San Isidro Huaral (N=200)
6.022.05.510.3Caritas (N=200)
6.038.58.010.2CMAC Chinca (N=200)
9.723.412.611.5CRAC Cruz de Chalpon (N=175)
2.541.016.510.7Edyficar (N=200)
Below the internat.
Poverty line ($PPP 2.16 at 1993 prices)
Below the national
poverty line (adj. by
regions) (%)
Below the median
poverty line (adj. by
regions) (%)
Daily expenditures
per capita (Soles)
Main type of financial institution
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Conclusions-1
• Main institution types in samples (legal status):- (semi-formal) NGOs/solidarity groups,
cooperatives (member-based, peer pressure) - public banks, private banks, micro-banks
(information asymmetry)• Bangladesh: 46% client households
- NGOs! (solidarity group lending)• Peru: 19% client households
- heterogeneous sector (transformed in 90s, micro-banks!)
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Conclusions-2
• Bangladesh: higher breadth of outreach! - microfinance since 1970s- high population density, low administrative costs
• Peru:- mistrust in formal institutions: inflations 1980s (savings
losses!), guerilla war 1980s-90s- heterogeneous geography (Andes, rainforest)
• Bangladesh: higher depth of outreach, NGO-MFIs! Peru: cooperatives!
- length of membership: 5 yrs vs. 3 yrs (Peru)->mutual trust
- declining poverty pattern with increasing length of membership
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Conclusions-3
• Bangladesh: 29% saving hhs, Peru: 9% • mainly demand constraints by poor for existing
savings products
-> Does institution type really matter? - mission!: management emphasis (triangle!)- ownership -> social investors- targeting strategy: rural, women, poor; instruments?
- social capital/ pressure (member-based institutions)
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THIS IS THE END …
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Old versus new paradigm• Old paradigm of sector-directed, supply-led
and subsidized credit:– faulty assumptions about demand (i.e. “need”)– focus not on financial sustainability of institution, but on
(depth) of outreach. Impact was assumed.
• New paradigm: – focus on institution and systems building – liberalization of financial markets as necessary but not
sufficient condition for deepening financial systems need institutional and technological innovations to reduce transaction costs
– Demand orientation, three objectives
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Relative poverty outreach of Grameen Bank, by expenditure terciles
100.0%Total
31.6%3
33.3%2
35.1%1
Client households of Grameen Bank
Tercile of daily per-capita expenditures from geographic subsample of
nationally representative sample (N=400)
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Relative poverty outreach of BRAC, by expenditure terciles
100.0%Total
20.0%3
32.0%2
48.0%1
Client households of BRAC
Tercile of daily per-capita expenditures from geographic subsample of
nationally representative sample (N=559)
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Relative poverty outreach in Bangladesh
21.5%
19.9%
19.2%
21.3%
18.2%
100.0%
24.1% 7.3% 37.5%
22.8% 18.7%
21.5% 21.1% 25.0%
16.2% 21.1% 25.0% 37.5%
15.4% 31.7% 50.0% 25.0%
100.0% 100.0% 100.0% 100.0%
1
2
3
4
5
Total
Non-clients
(N= 428)
Main type of financial institution
NGOs Public Other government Other
providing bank institution (private
microfinance providing bank,
microfinance coop, etc.)
(N=228) (N=123) (N=12) (N=8)
Quintile of daily per-capita expenditures from nationally representative sample
24
Relative poverty outreach in Peru
22.4%
21.1%
19.7%
18.6%
18.1%
100%
8.7% 11.8%
26.1% 7.9% 3.7% 17.6%
23.6% 40.7% 11.8%
43.5% 18.4% 29.6% 35.3%
21.7% 47.4% 25.9% 23.5%
100.0% 100.0% 100.0% 100.0%
1
2
3
4
5
Total
Non-clients
Main type of financial institution
Public bank Private banks Municipal Other
(Banco de (includes Savings and (NGO, rural
la Nacion) micro-banks) Loan Bank savings bank,
(CMACs) coop, etc.)
Quintile of daily per-capita expenditures from nationally representative sample (N=800)
25
Poverty by length of membership
32.09.151.728.07.4MeanTotal (N=2325)
33.59.653.629.27.2MeanNon-clients (N=2174)
9.80.013.77.812.6MeanLonger than 1 year and 7 months (N=51)
8.24.126.510.210.2MeanLonger than 1 year and less than or equal to 1 year and 7 months (N=49)
13.71.033.311.89.1MeanLess than or equal to 1 year (N=51)
Below the internat. Poverty
line($PPP 2.16 at 1993
prices)
Below the internat. Poverty
line($PPP 1.08 at 1993
prices)
Below the national poverty line(adj.
by regions)
(%)
Below the median poverty line(adj.
by regions)
(%)
Daily expenditures
per capita (Soles)
Length of client relationship (in approx. Tercile ranges)