Poverty-sensitive scorecards to prioritize lending and grant allocation with an application in central America

Abstract

The importance of credit access in improving economic opportunities in developing markets is well established and generally recognized by policymakers. The optimal use of loan funds, however, could be subject to a potential tradeoff between sustainability and poverty reduction. This chapter develops a povertysensitive scorecard system for lending or grant allocation in underdeveloped markets. The methodology is innovative in that it combines both a risk and a poverty scorecard.