Poverty Reduction and Female loan Recipients: Comparing Non-Profit vs. For-Profit Microcredit Programs’ Supplemental Services

Abstract

The majority of loans through microfinance programs are received by women and both Non-profit (NP) and for-profit (FP) organizations also offer other services. This study explored an assumption that NP providers would offer supplemental programming such as child care, health care, or education, and participation in local or regional advocacy efforts. Conversely, the expectation was that FP providers would charge higher rates and fees, offer financial services, business planning, and savings, rather than child or health care, or education. Seventeen programs offering microfinance in large city in India were surveyed, including (8) non-government organizations (NP) and (9) non-banking financial institutions (FP). The data confirmed that FP providers reported higher interest rates, larger loan amounts, and less children’s education or childcare. Both types of providers about equally reported other services. We discuss implications for the benefits of both NP and FP models and gendered poverty reduction.