The funds should not be targeted to specific sectors or credit products, but rather to the administration of ready credit. Policy Implications and Lessons Learned Successful financial products rely on careful incentive structures, corresponding not only to the needs of the financial mechanism itself but also to the ability of the implementing institution to suitably respond to the market. Financial products operating for the purpose of social impact should maintain a capacity for flexibility in terms of product design, criteria, and delivery systems. Too high a commitment to solidarity group models in place of conventional collateral-based guarantees can actually break solidarity and the work ethic, especially when one or two members in a group of four or five receive larger loans whose debt cannot be easily guaranteed by the group. Positive returns to solidarity group models diminish as loans grow larger and more diverse.
Smaller loans tend to be more effective in reaching women beneficiaries.
A mixed strategy of providing small and larger scale loans, as well as targeting women for larger loans should be considered. Its success is also due to strong information-gathering systems, and the ability to rapidly respond to problems in cases of payment delays. This points to the critical role of monitoring and information systems, clear loan criteria, and solid loan packaging and counseling for clients. The evaluation was conducted in March 1996. The mission consultant was Norah Becerra of Integration MBA, Frankfurt, Germany.