New Insights on Microfinance Lending Methodologies

While lending methodologies are a key aspect of microfinance, the systematic data that has been collected on their respective clients and outcomes is scarce. This report is designed to give an in-depth understanding about how different lending methodologies affect client outcomes around the world, including outcomes related to clients’ access to finance, repayment, and satisfaction. 

This report is a deep dive into the role that microfinance lending methodologies – specifically, group and individual – play in client experience, with a specific focus on access to finance, repayment, and business outcomes.

The analysis here shows that both lending methodologies are key to serving different sectors of the microfinance market. However, given one of the core theses of microfinance is to reach the most excluded segments of the population and improve their lives, group lenders do perform better across the board.

Here are three key takeaways from the new report on individual and group borrowing:

1. Group loans continue to reach more first-time borrowers and people without access to a ‘good’ alternative.

2. Group lending clients do not vastly outperform their individual lending counterparts on repayment outcomes.

3. Group lending clients report greater empowerment outcomes than their individual lending counterparts. 

There are more insights in the full report, and we are excited to dig into more analysis of lending methodologies in 2024. More information about 60dB’s research on microfinance can be found here.

Check out all the insights in the full report on individual and group borrowing in microfinance.

Interested in participating in the 2024 Microfinance Index? See more information here or get in touch with us!