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Contrasting Methodologies Used to Expand the Outreach of Financial Services to the Rural Poor: Lessons from Mexico’s PATMIR Experience Julia Paxton, Ph.D. International Conference on Rural Finance Research: Moving Results into Policy and Practice FAO: Rome, Italy March 2007
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PATMIR: expanding financial services in rural areas of Mexico 3 Consulting firms 3 Consulting firms WOCCU, DID, DGRV 3 Methodologies 3 Methodologies Strengthen, Expand, New
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NUMBER OF INSTITUTIONS ACCORDING TO METHODOLOGY BY CONSULTANT
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OUTREACH KEY POINTS KEY POINTS 1. BETTER CLIENT INFORMATION IS NEEDED IF OUTREACH IS A GOAL 2. BETTER OUTREACH MEASURES ARE NEEDED
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AVERAGE LOAN AND DEPOSIT SIZE BY METHODOLOGY (US$1 = 10.6 Mexican pesos) Dec. 2006
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DEPTH OF OUTREACH INDEX DOI
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Poverty Outreach Index (PO) where n = population size x = income of the ith household below the poverty line q = number of households below the poverty line z = poverty line = researcher designated weight
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AVERAGE PO INDEX BY CONSULTING FIRM AND BY METHODOLOGY
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GEOGRAPHIC ANALYSIS DID NEW: SERFIR
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GUERRERO: DGRV NEW and STRENGTHENING TLAPANALTOMIN SULJAA ZIHUATLAN
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PATMIR Sustainability
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SO WHICH METHODOLOGY WINS? I wish it were that simple! General trends: New institutions have great outreach and lower arrears but are costly Existing institutions have better sustainability measures but can be slow to change and have portfolio quality problems
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BUT…. New institutions are becoming more sustainable Existing institutions can and do reach the poor in addition to their other clients and when motivated, can modify their methodology to expand outreach
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OUTREACH AND SUSTAINABILITY -0.50 0.00 0.50 1.00 1.50 2.00 2.50 SDIDOIPO Index
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OUTREACH AND SUSTAINABILITY -0.50 0.00 0.50 1.00 1.50 2.00 2.50 SDIDOIPO Index NewStrengthen Expand
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TRADE-OFFS
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Trade-offs between outreach and subsidy dependence
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GEOGRAPHIC COVERAGE CORRELATIONS
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HOW FAR OUT CAN YOU GO? Rules of thumb from the field 25 km radius depending on roads No more than one hour of loan officer travel Average of 10 – 20 minute travel time for client Going into areas with an integrated rural development strategy is helpful
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THANK YOU!!!
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