Social Indicators Research

, Volume 133, Issue 2, pp 455–475 | Cite as

The Poverty Penalty and Microcredit

  • Begoña Gutiérrez-Nieto
  • Carlos Serrano-Cinca
  • Beatriz Cuéllar-Fernández
  • Yolanda Fuertes-Callén


A poverty penalty arises when the poor pay more than the non-poor to access goods and services. An example is the cost to access credit. Microfinance Institutions (MFIs) usually explain their high interest rates on the grounds of the high risk involved in microcredit, the high fixed cost associated with small loans and the high financial expenses borne by MFIs due to difficulties in deposit collection. The paper finds that a poverty penalty exists. After identifying drivers of the poverty penalty in a sample of MFIs from 17 countries, this paper focuses on the Colombian case. Operating costs is the most important factor explaining effective interest rates. Other factors, such as risk, cost of funds, or profitability, are relevant in some regions. This paper encourages transparent pricing as a keystone for ethics in these entities.


Microfinance Poverty penalty Mission drift Banking 



This work was supported by Grants ECO2010-20228 and ECO2013-45568-R of the Spanish Ministry of Education and the European Regional Development Fund and by Grant Ref. S-14/2 of the Government of Aragon. The authors are very grateful to the MFTransparency project, leaded by Chuck Waterfield.


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Copyright information

© Springer Science+Business Media Dordrecht 2016

Authors and Affiliations

  • Begoña Gutiérrez-Nieto
    • 1
  • Carlos Serrano-Cinca
    • 1
  • Beatriz Cuéllar-Fernández
    • 1
  • Yolanda Fuertes-Callén
    • 1
  1. 1.Department of Accounting and FinanceUniversity of ZaragozaSaragossaSpain

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