Why do the poor pay more? Exploring the poverty penalty concept

Mendoza, Ronald U

doi:10.1002/jid.1504

Cited by 98 publications

(74 citation statements)

References 41 publications

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“…Unfortunately, children of farmers take no interest after seeing their parents remain in poverty (Cariño, 2013) Farmers, fishermen, and foresters are among the poorest citizens of the Philippines. They pay more for basic services and commodities than those who have the capacity to pay, because investment costs to extend electricity lines escalate the farther the lines are from the electricity grid (Mendoza, 2011). They often have to borrow from micro-financiers and repay the loan in weekly installments; they end up paying higher interest charges as compared to bank rates (Carroll, 2010).…”

Section: In Support Of Agricultural Entrepreneurshipmentioning

confidence: 99%

Reviving Farming Interest in the Philippines Through Agricultural Entrepreneurship Education

Santiago

Roxas

2015

JAFSCD

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Section: In Support Of Agricultural Entrepreneurshipmentioning

confidence: 99%

Reviving Farming Interest in the Philippines Through Agricultural Entrepreneurship Education

Santiago

Roxas

2015

JAFSCD

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“…It is an example of a poverty penalty: the poor pay more, Mendoza (2011). This is a widely debated topic.…”

Section: Microcredits: the Long Tail Of Creditsmentioning

confidence: 99%

“…Given the high operating costs and the lack of deposits, mission centered MFIs either need subsidies or have to charge high interest rates. This is a clear example of a poverty penalty, Mendoza (2011). Hypotheses have been empirically tested with a sample of around 1,000 MFIs.…”

Section: Introductionmentioning

confidence: 99%

Microfinance, the long tail and mission drift

Serrano‐Cinca

Nieto

2014

International Business Review

107

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Poor people were excluded from financial services until microfinance institutions (MFIs) emerged. The mission of MFIs is to alleviate poverty, contributing to women empowerment especially in rural communities. Microcredits can be analyzed under Pareto's 80/20 Principle. Their clients are situated in the long tail of the wealth distribution function. This niche market is not very attractive, because of its high administrative costs, lack of deposits and the need for compensating low revenues with fluctuating subsidies. Some MFIs have drifted from their mission. This paper presents a model to explain microfinance and mission drift, tested with hypotheses. The results from the empirical study show a pattern of mission centered MFI: a small NGO, with labor productivity, receiving donations and obtaining a high margin. The need for reducing interest rates is concluded. According to the long tail theory, this can be done through the use of efficient technology, as the e-commerce sector has achieved. According to the long tail theory, this can be done through the use of efficient technology, as the ecommerce sector has achieved.

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“…This is generally referred to as the poverty penalty. The poverty penalty can take on five possible forms [25]: poorer quality, higher prices, non-access, non-usage, or catastrophic spending burden.…”

Section: Introduction To Bopmentioning

confidence: 99%

The Effects of National Cultural Traits on BOP Consumer Behavior

et al. 2016

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Abstract:Scholars who aim to solve problems with poverty and a lack of resources often focus on bottom of pyramid (BOP) consumer groups. They propose that the traditional TOP (top of pyramid) business strategies are not suitable for BOP populations, and that it is crucial to determine and satisfy BOP consumption demands. The purpose of this study is to find out which factors influence BOP consumption, and to explore BOP integrated products. The concepts of "national cultural traits" and sustainable product design are also used. The findings will help enterprises learn how to make profits in BOP markets (addressing economic goals), while helping the poor get out of poverty (addressing social goals). Two different areas concerning BOP consumers are used to illustrate the results.

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Why do the poor pay more? Exploring the poverty penalty concept

Cited by 98 publications

References 41 publications

Reviving Farming Interest in the Philippines Through Agricultural Entrepreneurship Education

Reviving Farming Interest in the Philippines Through Agricultural Entrepreneurship Education

Microfinance, the long tail and mission drift

The Effects of National Cultural Traits on BOP Consumer Behavior

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