Targeting microcredits to poor household enterprises in Ecuador

Diana Hidalgo and Hessel Oosterbeek

In 2007 the government of Ecuador launched a microcredit program for enterprises run by poor households. The program was targeted to households at the bottom two quintiles in the wealth distribution. This paper uses data collected prior to the start of the program to examine whether the government’s targeting strategy reaches all households that are constrained in their access to loans of the type provided by the program. We find that the program excludes households in the third quintile of the wealth distribution that are equally credit constrained and have very similar demands for credit as households served by the program.

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