Is microcredit targeted to poor people? Evidences from a Cambodian microfinance institution.

This study extends research on the social performance of microfinance institutions. The research methodology is based on Grameen Progress out of Poverty IndexTM (PPITM) for Cambodia applied to a sample of borrowers randomly extracted from a Cambodian microfinance institutionÕs loan portfolio. Dataset has been directly collected through in-house interviews. Main questions discussed here are: (1) Is microcredit targeted to poor people? (2) Has the poverty rate of the sample changed in last six months? and (3) What percentage of male vs. female clients is poor? We found an average poverty likelihood of about 8.1%, estimated at the day of the interview, steady over a period of six months and not statistically different between male and female borrowers. This evidence might be related to business geographical location or targeting. Actually, PPI too much relies on asset ownership rather than on cash flows and saving capacity. Despite the general wisdom microcredit is targeted to the Òpoorest among the poor peopleÓ, this is utterly consistent with a sound and safe (micro)banking activity, aimed at sustainable results. Here comes a call for a triple bottom line performance evaluation on microfinance institutions: economic, social and environmental effects of their activities.