A poverty outreach index and its application to microfinance

The Foster, Greer, and Thorbecke poverty index is modified to a poverty outreach measure that incorporates both depth of outreach and scale. In an application to microfinance institutions, the use of this type of poverty outreach measure rejects the common notion that there is a necessary trade-off between client outreach and institutional sustainability. Banks and credit unions are found to have greater poverty outreach than smaller, subsidized non-governmental organizations that exclusively target the poor.