Poverty and Microfinance in Bolivia

A major accomplishment of development finance in recent years has been the expansion of the supply of financial services for the poor. Little information exists, however, about the extent to which microfinance actually reaches the poor. This study analyzed a sample of clients served by five microfinance organizations in Bolivia. The data revealed that these organizations reach many rural and urban poor, but not the poorest of the poor. Group-based lenders reach a somewhat poorer clientele than those organizations making individual loans. The individual lenders, however, seem to be able to better adjust loan sizes to fit the creditworthiness of the client. Therefore, individual lenders appear to face fewer constraints in increasing loan sizes in response to client demand. The ability of these organizations to adjust to loan demand may be important in influencing their ability to retain clients as competition among organizations increases