Evaluating impacts of microfinance institutions using Guatemalan data

Purpose – The purpose of this paper is to investigate microlending outcomes among Latin American non‐governmental organizations (NGOs), specifically microfinance institutions (MFIs). While there is a growing movement of non‐profit ventures channeling small loans to the poor worldwide, assessments of their impacts are lacking. Thus, field interviews with clients who had various degrees of involvement in the process of receiving microloans from MFIs were conducted over a summer in Guatemala. Design/methodology/approach – Using a dataset of 393 clients from Guatemalan MFIs, microfinance impacts from two dimensions are examined and impacts measured along financial and social dimensions by surveying new clients, current clients, and graduated clients of five MFIs in Guatemala. Findings – Applying univariate and multivariate analyses shows that for Guatemala, MFIs do produce a measure of improvement in the lives of microfinance clients. This improvement is concentrated along the social dimensions of housing, health, and client empowerment. Research limitations/implications – A limitation of this paper is that it focuses on only five of several dozen MFIs in Guatemala. What is needed is further use of the survey instruments to carry out subsequent studies throughout more of Latin America, and beyond. Practical implications – This research suggests that microfinance demonstrates promising results associated with social benefits to various client populations. As such, it holds a variety of implications for government and other policymakers as they consider innovative ways to reduce poverty and human suffering around the globe. Originality/value – It is anticipated that this field study will contribute to the furtherance of literature on the effects of lending among the poor.