As the Microfinance Institutions grow in size, they tend to target and serve the wealthier and non-agriculturally employed clients residing in urban areas.
Sunil Sangwan, Institute of Rural Management Anand, Anand, Gujarat, India.
Narayan Chandra Nayak, Indian Institute of Technology Kharagpur, Kharagpur, West Bengal, India.
Sweta Sen, Institute of Economic Growth, New Delhi, India.
Vikas Sangwan, Assistant Professor, Jindal Global Business School, O.P. Jindal Global University, Sonipat, Haryana, India.
The study examines the impact of the Microfinance Institutions’ (MFIs) size on their client targeting. Using MFI clients’ household data, the study considers household income, wealth, human development, caste, settlement type, and purposes of loans as different client targeting dimensions. The analysis is based on a sample survey of over 301 women clients who had received loans exclusively from 12 big and 13 small MFIs. The results indicate that the MFI size has an adverse effect on social performance.
As the MFIs grow in size, they tend to target and serve the wealthier and non-agriculturally employed clients residing in urban areas. The women’s passive role in borrowing emerges as yet another concern. The instances of poverty penalty among the poor clients as reflected through higher interest rates for small-sized loans are yet another concern. The target towards poverty eradication may turn out to be a far cry under the large-sized MFIs.
Published in: Humanities and Social Sciences Communications
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