Poverty scoring and financial inclusion of the poor

The use of poverty scoring is associated with increased outreach towards poor borrowers only in nonprofit microfinance institutions while, in for-profit microfinance institutions, poverty scoring is associated with increased availability of financing. Poverty scoring allows for-profit microfinance institutions to borrow funds from social investors in addition to funds borrowed from the market. As long as these social funds do not substitute market funds used in financing poor microborrowers, the share of poor clients served increases, so does financial inclusion of the poor.